Aetna seeks $120M from Cypress Medical Center for illegal ‘kickbacks’

The Aetna Life Insurance Company has brought a fraudulent billing case against the North Cypress Medical Center and its CEO, Dr. Robert Behar.

The suit was filed Monday, Feb. 23 in the U.S. District Court for Southern Texas, Houston Division.

According to the complaint, North Cypress is a 139-bed community hospital with publicly reported annual gross revenues in excess of $1.5 billion dollars a year – an amount that is more than twice that of other nearby hospitals that have substantially more patient volume and provide a wider array of medical services.

“North Cypress’ extraordinary revenues, which make it an extreme outlier in the healthcare industry, were not achieved by creating a higher quality and more efficient hospital facility, but rather, through a fraudulent billing scheme that was masterminded by Dr. Robert Behar,” the suit states.

“The scheme includes paying illegal kickbacks to physicians in exchange for patient referrals disguised as ownership interests in North Cypress, charging grossly excessive fees, implementing improper billing techniques, and forgiving members’ financial responsibility … in order to make the scheme work.

“Absent this, patients would not knowingly be treated at North Cypress and agree to pay much higher out of pocket amounts required under the terms of their plan, when they could get the same services at a fraction of the cost at hospitals in Aetna’s network within close proximity of North Cypress.”

The suit goes on to accuse Dr. Behar of using his “Physician Vital Statistics,” which he calls his “sacred reports,” to track the volume and value of each physician’s referrals to North Cypress. Lots of referrals result in him allowing physicians to not only become owners in North Cypress, but also increase their ownership interests. Physician owners who do not refer enough patients are squeezed out.

Aetna maintains that Dr. Behar’s “out-of-network” business scheme has caused the company to overpay North Cypress as much as $120 million since Jan. 1, 2009.

“The financial harm inflicted on Aetna and the healthcare system was not by happenstance, but by pure design. Dr. Behar intended to harm Aetna as part of his greed and personal vendetta against the managed care industry and, in fact, routinely expressed his desire to bilk Aetna and other payors,” the suit states.

“For example, on one occasion following an increase of North Cypress’ already outrageous fees, Dr. Behar sardonically told an employee in North Cypress’ billing department that ‘I am sure happy you jacked up those rates. I have nothing but sympathy for Aetna.’”

Aetna is alleging violations of the Racketeer Influenced and Corrupt Organizations Act and Texas Insurance Code, in addition to allegations of tortious interference and breach of contract.

However, North Cypress contends Aetna is attempting to rehash a previous lawsuit against it filed in 2013 that was dismissed.

“North Cypress has established that Aetna’s "Upper Management" has engineered a scheme to sue out-of-network providers throughout the nation to coerce them into financially burdensome in-network contracts with Aetna by filing suits alleging baseless violations of law which do not apply in commercial contexts, to release damaging press statements and to ‘bring down’ any provider who dares oppose it,” said Karen Hinton, spokesperson for North Cypress.

“North Cypress has refused to bow to such pressure. North Cypress also has established that it has not violated any federal statutes with regard to government contracts. It specifically adheres to all federal regulations.”

On top of actual damages in the amount of $120 million, Aetna seeks recovery of treble, consequential and incidental damages, plus attorney’s fees.

Aetna is represented in part by Andrews Kurth LLP.

Case No. 4:15-cv-00491