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Hospital billing scheme probe spreads to Kansas

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At the podium, Jorge Perez introduced himself in Fulton Sept. 19, 2017 as the new owner of the Fulton Medical Center under the auspices of two companies, National Alliance of Rural Hospitals and Empower HMS, also known as Rural Community Hospitals of America.

A Kansas couple has filed a lawsuit that involves a $90 million billing scheme found last year at a rural Missouri hospital.

James and Phyllis Shaffer are suing Jorge Perez over what the Mission Hills, Kansas, couple alleges were replays of the original scheme discovered at Putnam County Memorial Hospital in Unionville, Missouri, the Kansas City Star reported.

Missouri’s auditor released a report in 2017 saying the hospital billed insurance companies for lab tests that didn’t occur at the facility and received a cut of payments funneled to another lab company. The audit doesn’t name Perez, but records show he’s vice president of Florida-based Hospital Partners Inc., which the audit prominently mentioned.

Perez was unavailable for comment.

Perez introduced himself in Fulton on Sept. 19, 2017, as the new owner of the Fulton Medical Center. Missouri Attorney General Josh Hawley’s office in May opened an investigation into Hospital Partners Inc. on accusations of fraudulent billing procedures.

The Shaffers are shareholders in a company that owns 20 percent of each of the 10 hospitals, four of which are in Kansas and Missouri. Their lawsuit alleges Perez and others seized control of the 10-hospital group, called HMC Hospitals, during a meeting last year in Kansas City. The suit also claims Perez took control after the HMC Hospitals board failed to immediately accept their proposed laboratory testing program.

Perez’s group “intended to implement at the HMC Hospitals and did implement in at least some of them” an “illegal billing scheme” that was “substantially similar to the scheme then being operated” at Putnam County Memorial, according to the lawsuit.

The couple alleges the scheme used the hospitals to submit reimbursement claims for lab work not done at hospitals, but rather at other laboratories. The lawsuit said the scheme took advantage of the hospitals’ status as critical access rural hospitals under designations by Medicare and Medicaid that allow the facilities to claim substantially higher reimbursements for the lab work than the other labs should be able to claim.

Perez is also president of Empower H.I.S. LLC, a company that’s a defendant in the lawsuit. Michael Murtha, a spokesman saying he represented Empower, called the lawsuit “frivolous.”

As previously reported Missouri State Auditor Nicole Galloway in 2017 released an audit of Putnam County Memorial Hospital — a 14-bed facility in Unionville. She said her office uncovered $90 million in inappropriate lab billings by hospital leadership and associates. In September 2016, the Putnam County Hospital Board hired Byrns and Hospital Partners Inc., to take over management of the hospital.

Galloway also released a follow-up audit last month.

–APNews

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