North Cypress seeks to dismiss Aetna’s $120M kickback suit

North Cypress Medical Center recently filed a supplement to bolster its motion to dismiss, which argues Aetna Life Insurance was “judge shopping” when it filed its fraudulent billing case.

Aetna filed suit against North Cypress and CEO, Dr. Robert Behar, on Feb. 23 in the U.S. District Court for Southern Texas, Houston Division.

Aetna charges the defendants of engaging in a fraudulent kickback scheme, which 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.

Aetna alleges 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.

Court records show that on March 9 North Cypress filed a motion to dismiss under the “First-to-File Rule” – a rule that applies when two similar suits brought by the same parties are filed in two different courts of proper jurisdiction.

On June 2 North Cypress filed a supplement to the motion, asserting Aetna is seeking the same discoverable documents that were also sought in a separate, but older, lawsuit.

North Cypress maintains it brought suit against Aetna first on Feb. 12, 2013, in Koening, et al v. Aetna et al, in order to collect unpaid payments from the insurance provider.

“North Cypress has filed this Motion to Dismiss only pursuant to the ‘First to File Rule’ … because it is obvious that Aetna is ‘judge shopping’ in an effort to maintain an identical, parallel lawsuit to the Koenig Case,” states North Cypress’ motion to dismiss.

On Thursday, March 26 Aetna responded to the motion, insisting allegations of both forum and judge shopping are “untrue,” and maintaining there is no substantial overlap between the current lawsuit and the Koeing case.

“Defendants’ accusations are flat wrong—as they well know,” Aetna’s response states. “Defendants’ Motion should be denied in its entirety.”

North Cypress submitted a reply to Aetna’s response on Monday, March 30, asserting most of the underlying facts of the Koeing case are repeated in Aetna’s Feb. 23 and the insurer does not present any evidence that it was not “judge shopping.”

“Overall, Aetna’s Response is lack luster in nature and completely omits arguments and/or facts to controvert or contradict many of the positions proffered by North Cypress which are supported by Aetna’s own pleadings,” the reply states. “This demonstrates that Aetna and its counsel know that the filing of the Original Complaint in the Aetna Case with the identical facts and allegations involving the same claims and the same time periods as in the Koenig Case was a misstep on their part and something they should not have done.”

A scheduling conference has been set for July 24.

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.

North Cypress is represented by Douglas Sutter, attorney for the Houston firm Kelly, Sutter & Kendrick.

Case No. 4:15-cv-00491