Unnecessary Surgeries Put Hospital in Three-Front War


When the government accuses a hospital of committing Medicare fraud by billing for unnecessary surgeries, the hospital has a real problem on its hands.  It’s at war with the government, and that’s expensive, as well as nerve-wracking.  But unless that battle ends in anything short of a complete victory for the hospital, it may have two more legal battles on its hands.

King’s Daughters Medical Center in Ashland, Kentucky, recently learned this lesson.  Its three-year battle with the government ended earlier this year with a settlement calling for a payment of $41 million.  But that wasn’t the end of its problems.  Why?  Because the surgery patients filed lawsuits against the hospital, as well as the doctors, for—you guessed it—performing unnecessary surgeries on them.  To date, 13 patient suits are pending against the hospital.

And now the hospital’s insurance company has launched its own attack.  On Monday Homeland Insurance Company sued in federal court asking for declaratory judgment that it isn’t responsible for those patient claims or for defense costs.  Its theory?  The policy excludes claims by the government for regulatory violations, including HIPAA violations.  The claims of the patients arose out of government claims for regulatory violations, and they include HIPAA claims.  Besides, the insurer argues, the unnecessary procedures didn’t arise out of misdiagnosis or errors of medical judgment.  They were simply part of an illegal scheme to make money.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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