There are times when health care facilities may contribute to paying a patients' insurance. For example, a patient who is hospitalized for some time where it is documented properly and financial need exists and it is disclosed.
However, can a health care facility pay for the initial premium that allows the patient to get treatment? Not usually. There are also some situations where copay and deductibles can be waived, but there are times when doing so is not allowed. These are two of the issues in a recent criminal case against the owner of a drug rehabilitation facility.
On March 25, 2018, David
Leo Johnson, the owner of Southern California Detox Treatment and Recovery (SCDTR) in Temecula, was charged with 30 counts of insurance
fraud and an aggravated white collar crime enhancement by the Riverside County District Attorney. The case is set for a felony settlement conference on August 29, 2018. The bail was set at $270,000 which is usually indicative of the alleged loss.
According to court pleadings, from
February 2015 to May 2016, Mr. Johnson is accused of billing more than 90 Health
Net policies for treatment SCDTR provided to its clients. This was a joint investigation by the DA’s Bureau of Investigation and the Federal Bureau of Investigation.
One issue is the payment of health insurance. It is alleged that an examination of the Health Net policies billed by SCDTR showed some policy applications used the SCDTR address as the policyholder’s residence and that Mr. Johnson's credit card was used to make the initial premium payments on 62 percent of the policies.
Interviews with clients allegedly showed that they did not submit the applications for their health insurance policies and were not aware of how the coverage was obtained. When interviewed, the clients also allegedly advised that Mr. Johnson did not charge them any of the required patient costs, including deductibles and copayments.
Per the policies that were billed by SCDTR, Health Net does not pay until deductibles are met. These policies carried a 50 percent deductible for substance abuse treatment by out-of-network providers, including SCDTR, up to an annual limit of $5,000 or more. Health Net contends it would not have accepted or paid on the claims had it been aware that SCDTR had violated the policy provisions by waiving the required patient costs.
One issue is the payment of health insurance. It is alleged that an examination of the Health Net policies billed by SCDTR showed some policy applications used the SCDTR address as the policyholder’s residence and that Mr. Johnson's credit card was used to make the initial premium payments on 62 percent of the policies.
Interviews with clients allegedly showed that they did not submit the applications for their health insurance policies and were not aware of how the coverage was obtained. When interviewed, the clients also allegedly advised that Mr. Johnson did not charge them any of the required patient costs, including deductibles and copayments.
Per the policies that were billed by SCDTR, Health Net does not pay until deductibles are met. These policies carried a 50 percent deductible for substance abuse treatment by out-of-network providers, including SCDTR, up to an annual limit of $5,000 or more. Health Net contends it would not have accepted or paid on the claims had it been aware that SCDTR had violated the policy provisions by waiving the required patient costs.
There is also an allegation that an examination of the
claims of dozens of policies revealed that they had been double billed and
Health Net paid on both sets before it was discovered.
I expect a significant increase in the number of health care fraud cases relating to rehabilitation facilities and facilities need to be very careful in how referrals are handled, insurance payments are addressed and any waiver of co-pays or deductibles. That is in addition to the services provided.
Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
