Physician Staffing Firm Faces Suit Claiming Hospital, ER Billing Fraud

Alicia Gallegos

July 20, 2020

Amid ongoing scrutiny of its business practices, physician-staffing giant TeamHealth is now facing a class action suit accusing the company of fraudulent patient billing and racketeering.

The lawsuit, filed July 10 in US District Court for the Northern District of California, contends that TeamHealth vastly inflates the rates it charges patients and aggressively pursues debt collection if patients fail to pay the inflated prices. The complaint alleges TeamHealth is illegally engaging in the corporate practice of medicine and is avoiding state bans of this practice by operating a web of subsidiaries and purportedly independent organizations.

In a statement to Medscape Medical News, TeamHealth denied the claims and indicated that the company plans to aggressively fight the lawsuit.

"TeamHealth is confident that our billing practices and organizational structure are fully compliant with long established laws and precedents," TeamHealth said in an emailed statement. "TeamHealth maintains a long-standing practice against balance billing. We believe these claims are wholly without merit and we look forward to vigorously defending ourselves."

TeamHealth, based in Knoxville, Tennessee, is one of the largest providers of outsourced clinical staffing and administrative services for hospital-based and freestanding emergency departments in the country.

The company, which was acquired by private equity firm Blackstone Group LP in 2017, operates within 47 states and runs about 3300 acute and post-acute facilities. TeamHealth contracts with hospitals to staff and manage various departments, including emergency, critical care, radiology, and anesthesiology services. The company currently controls about 17% of the emergency medicine market in the United States, according to the legal challenge.

The class action suit claims that TeamHealth is practicing corporate medicine but is able to skirt state laws that prohibit the practice through a spectrum of so-called subsidiaries and "independent" contractors.

As director of the enterprise, TeamHealth controls the terms of its physicians' employment, all physician staffing decisions, and all the rates its physicians and practice groups charge patients, according to the suit. The complaint claims these rates are inflated far above what is reasonable and customary for the services provided.

The suit's lead plaintiff, Sia Fraser, claims she experienced just such inflated bills after an emergency department visit. Fraser was treated for emergency gallstone surgery by a physician in a TeamHealth-owned physician group in September 2019 at Tri-City Medical Center in Oceanside, California. TeamHealth billed Fraser $1082 for an hour of observation care during the visit, according to the suit. For the same hospital visit, TriCity Medical Center billed Fraser $63 per hour for observation care performed by hospital physicians.

Craig Briskin, an attorney for Fraser with the law firm Justice Catalyst Law, said his team intends to obtain substantial monetary relief for consumers in the case and aim to return fairness and common sense to medical billing.

"We saw so many people struggling with outrageously high medical bills and wanted to do something about it," Briskin told Medscape Medical News. "We also saw that TeamHealth's 'customers' never entered any agreement with them, let alone agreed on any price they would pay. In fact, most patients don't even know that they're being treated by TeamHealth employees until they get a bill. We believe that TeamHealth is defrauding consumers, and we filed this suit to hold the company accountable."

"A Contract Leveraging Tool"

The suit comes at the heels of growing skepticism about TeamHealth's practices. The company has come under fire in recent months for reportedly sending surprise bills to patients and slashing physicians' hours during the coronavirus health crisis, according to ProPublica. One analysis of the company's records by the news organization found that TeamHealth is substantially marking up medical bills to boost profits. Two TeamHealth affiliates in Texas, for instance, billed 7.7 times more than their actual costs for clinicians and support services, according to the June ProPublica report.

In a March 2019 letter to US senators in response to congressional inquiries into surprise billing, a spokesman for TeamHealth wrote that balance billing is "a contract leveraging tool" for the company.

"Balance billing yields immaterial revenue for TeamHeath and is not performed with the objective of enhancing revenue," TeamHealth President and CEO Leif Murphy wrote in the letter. "Rather, for TeamHeath and for emergency medicine providers as a whole, balance billing is our only available source of contract negotiating leverage."

In 2017, TeamHealth balance billed 0.16% of the patients who presented in its emergency departments. The average balance billed amount was $529, excluding patient cost sharing amounts, copayments, co-insurance, and deductibles, according to the letter.

"However, only 30% of the patients we balance billed actually remitted a full or partial payment for such amount," Murphy wrote. "In aggregate, TeamHealth receives just 0.08% (8 BPS) of our commercial fee-for-service collections from balance billed amounts."

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