Kansas Couple Claims Hospital Billing Scheme Widespread

A $90 million billing scheme found last year at a rural Missouri hospital spread to as many as 10 other hospitals, according to lawsuit filed by a couple from suburban Kansas City.

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.

The newspaper was unable to reach Perez for comment.

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.”