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Tenet Defeats Medicare Advantage Class Action

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Miami litigator Alan D. Lash helped one of South Florida’s largest hospital systems beat back a putative class action lawsuit with the potential for far-reaching fallout.

The Lash & Goldberg partner worked with partner Greg Weintraub and senior counsel Dave Ruffner to represent Tenet Florida Inc. in closely watched litigation that once targeted insurance companies but now aims to recoup billions of dollars from hospitals across the country.

“This does have significant implications … industry-wide,” Lash said. “There are several of these actions that are pending in (Florida) and other states.”

Lash & Goldberg’s client, Tenet, operates 10 acute-care hospitals, three standalone emergency centers, urgent-care clinics and more than 20 surgical and diagnostic imaging offices in Miami-Dade, Broward and Palm Beach counties.

(Related: Hospitals Are Vanishing and Undoing the ACA May Make It Worse)

It is one of several hospital systems in the continental U.S. and Puerto Rico facing suit in federal court from a Medicare Advantage assignee looking to recover insurance payments under the Medicare Secondary Payer Act.

The plaintiff is linked to Miami-based MSP Recovery Law Firm, which claims hospitals collected billions of dollars from Medicare and Medicaid when other insurers should have paid.

Under federal law, the public health insurance programs are set up as secondary rather than primary payers. This means any other insurer should pay before Medicare or Medicaid covers the balance on claims.

But details that emerged last year suggested federal health officials lost hundreds of millions of dollars in overpayments to Medicare Advantage health plans under. At the time, NPR reported losses for 2007 alone were about $128 million and went unnoticed until an initial round of audits.

MSP Recovery’s lawsuit suggests Tenet contributed to the losses. The complaint claimed the hospital system double-billed and never returned overpayments.

Plaintiff MSPA Claims 1 LLC, an assignee of Florida Healthcare Plus Inc., filed suit against a Tenet subsidiary, St. Mary’s Medical Center Inc. of West Palm Beach, pinpointing an alleged Medicare overpayment of about $286 for a beneficiary identified only by initials. It then sought class certification for a broad recovery.

“The hospital collects from both sides,” said plaintiffs lawyer John H. Ruiz, co-lead counsel in the MSP Recovery suits. “It is something that is impermissible by law and frankly unethical. … That’s the nature of the beast here. There are billions upon billions of dollars that are overpaid.”

But Lash and his team argued the plaintiff lacked legal standing to sue the health care company and persuaded U.S. District Judge Kathleen M. Williams in Miami to close the case.

“The statute that the plaintiffs were suing under … the Medicare Secondary Payer Act … only allows Medicare Advantage organizations to sue insurance companies, known as primary payers,” Lash said. “Since the hospital was a provider and not a primary payer, we did not believe that the statute … gave them standing.”

Williams agreed. The judge dismissed three of the plaintiff’s claims with prejudice, dismissed two others without prejudice and declined to exercise supplemental jurisdiction over claims brought under state law.

— Read Tenet says hospitals target of criminal probe over kickbacks on ThinkAdvisor.

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