Taryn Phaneuf Jul. 26, 2016, 12:49pm


HOUSTON — The owner of a Texas hospital has accused the Kickapoo Traditional Tribe of Texas of fraud and violating a federal labor law when its health plan and plan administrators refused to pay more than $2 million in medical benefits for services provided to an employee covered in the health plan.

Victory Parent Company, which owned Victory Medical Center Landmark in San Antonio, brought a lawsuit July 8 in U.S. District Court for the Southern District of Texas against the tribe, as well as its self-insured group health plan and two plan administrators: Lucio Garcia-Zuazua and Roberto L. Rodriguez, who is general counsel for the tribe.

Victory Parent Company filed for bankruptcy in June 2015.

Plaintiffs claim plan administrators conspired to defraud Victory Parent without regard for their fiduciary responsibilities mandated by the Employee Retirement Income Security Act of 1974, which sets minimum standards for most health plans in private industry. Under ERISA, health plans must disclose plan information to participants. It also outlines the fiduciary responsibility of plan administrators, which refers to the rule that administrators act in the interest of participants and beneficiaries for the purpose of providing benefits and paying expenses.

“Defendants’ course of conduct with the plaintiffs demonstrates an intentional bad faith, which conduct has resulted in devastating injuries to the plaintiffs,” the complaint states.

The complaint outlines a series of events starting with a patient who sought services in 2013. In August and September of that year, a patient referred to in court documents as Patient RS underwent lumbar anterior and posterior procedures that required two weeks of inpatient care. Victory Parent claims that it verified the patient’s insurance, including any exclusions to benefits under the plan and pre-certification of the medical necessity of the treatment before conducting the procedures.

It submitted a claim for more than $2.1 million, but the plan rejected the entire claim, saying the treatment wasn’t medically necessary. Victory Parent appealed the decision and, after two years, was told the claim was denied because of exclusions in the plan. To the plaintiffs, both reasons are highly suspect because of the steps taken ahead of providing any medical treatment. According to the complaint, treatment was determined to be medically necessary and no exclusions were found.

Victory Parent requested copies of the plan to verify the exclusions five times, and claims the defendants have refused to produce the documents. Plaintiffs allege that the exclusions weren’t in place at the time of the procedure and the defendants created exclusions later to justify denying the benefits.

“Even if the purported exclusionary language did, in fact, exist at the time of precertification, the defendants were obligated to affirmatively disclose said exclusionary language to the plaintiffs at the time,” the complaint states.

Kickapoo issued a statement saying it would defend itself against the lawsuit. 

"The Kickapoo Traditional Tribe of Texas always lives up to its obligations. The Tribe vigorously denies the accusations that have been set forth by Victory in its lawsuit against the Tribe and in the media," the statement reads.

"Victory Parent Company is a bankrupt entity, and had already filed for bankruptcy more than a year before it filed its lawsuit against the Tribe this month. The company’s motives and credibility with respect to its claims must therefore be seriously questioned. Indeed, Victory Parent Company’s lawsuit and the statements it has circulated in the media are filled with claims that are simply untrue.

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