Lab sued for Fraud by New Jersey Blue Cross Plan

On June 25, 2009 Horizon Blue Cross Blue Shield of New Jersey filed a civil suit in New Jersey Superior Court against Biodiagnostic Laboratory Services of Parsippany, N.J. for allegedly submitting more than $14 million in fraudulent health insurance claims to Horizon between 2005 and June 2009 (Horizon Blue Cross Blue Shield of New Jersey v. Biodiagnostic Laboratory Services LLC).

The complaint alleges violations of the New Jersey Insurance Fraud Prevention Act (IFPA) and common law claims for fraud, negligent misrepresentation, and tortious interference. According to the complaint, BLS and its principals submitted false and inflated health insurance claims that misrepresented and overstated the charges for services rendered by more than $14 million.

One of the primary allegations made by Horizon BC is that BLS waived patients’ out-of-network coinsurance and deductibles but included the waived amounts in claims submitted to Horizon, according to the complaint. As a result, Horizon said it paid BLS more than $10 million in charges for services that should have been charged to patients.

Horizon BC argued that by waiving the out-of-pocket costs patients are supposed to pay when they obtain services out of network BLS diverts patients from participating providers, undermines the insurer’s ability to control costs, interferes with and circumvents the terms of the health benefits plan, and promotes the proliferation of unnecessary services.

Horizon made the same argument in lawsuits filed in state court in May against two New Jersey hospitals over their policy of waiving the coinsurance, deductibles, and other out-of pocket expenses patients normally pay when they obtain services from nonparticipating providers.

Horizon is seeking a court order barring BLS from waiving member liability for coinsurance, deductibles, and other out-of-pocket costs, and prohibiting it from paying referral fees. The insurer also is seeking compensatory and punitive damages, treble damages under the state IFPA, and attorneys’ fees.

Source: Washington G2 Compliance Report, September 2009 issue