Allstate filed a federal lawsuit on April 17 alleging Brentwood, Tenn.-based Surgery Partners, and nine of its Florida subsidiaries conducted a coordinated scheme to defraud the payer of millions of dollars through false medical billing, according to court documents reviewed by Becker’s.
Here are eight things to know:
1. The complaint, filed in the U.S. District Court for the Middle District of Florida, claims the scheme was designed to target patients in minor motor vehicle accidents and subject them to “extraordinarily aggressive treatment” to inflate insurance claims far above what the injuries warranted. The defendants include seven ASCs, Tampa Pain Relief Center and Anesthesiology Professional Services, all owned and operated by Surgery Partners.
2. Allstate claims the defendants billed for surgical procedures never performed, double- and triple-billed for components of a single procedure, billed for more spinal levels than were actually treated and charged for supplies never used.
3. The defendants billed Allstate more than $1.43 million alone for surgical cage insertions that were not separate procedures from the instrumentation already being billed, according to the complaint. Additionally, the lawsuit alleges $3.87 million was billed improperly just for supplies using a single billing code (CPT 99070) across the defendant ASCs.
4. The scheme allegedly relied on a network of personal injury law firms who steered clients to the Surgery Partners facilities, with the shared goal of maximizing charges, which were then used to inflate the perceived value of injury claims and extract higher settlements from Allstate.
5. Allstate alleges this is not an isolated incident. In 2020, Tampa Pain Relief and two Surgery Partners executives paid $41 million to settle False Claims Act allegations involving unnecessary urine drug testing; and in 2018, other Surgery Partners subsidiaries paid nearly $3 million in separate billing fraud settlements.
6. One of the physicians associated with the defendant ASCs previously paid $2.6 million to the federal government to settle kickback allegations, and the complaint claims Surgery Partners recruited physicians known to generate the highest charges regardless of medical necessity.
7. Allstate is bringing the claims under the federal RICO Act, common law fraud, civil conspiracy, aiding and abetting and unjust enrichment. The payer is seeking triple damages under RICO, plus attorneys fees.
8. Allstate is also seeking a declaratory judgment that all previously denied and pending insurance claims from the defendants are non-compensable, meaning it wants a court ruling that it owes nothing on any outstanding bills.
“We strongly disagree with Allstate’s factually inaccurate and legally deficient allegations and intend to defend this matter vigorously,” Michael Austin, an attorney with McDermott, Will & Schulte, counsel to Surgery Partners, told Becker’s in a statement. “This case reflects a disagreement over complex medical billing and reimbursement issues, not fraud. We believe this lawsuit represents a retrospective attempt by Allstate to recharacterize previously resolved matters without regard to the impact on patient care.
“We are also concerned about the broader trend by Allstate of attempting to bring large, aggregated litigation against healthcare providers, which can create disruption without benefiting patients.”
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