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  • Umass Memorial Medical Center, Inc. vs. Tufts Health Plan Inc. et al Other Contract Action document preview
  • Umass Memorial Medical Center, Inc. vs. Tufts Health Plan Inc. et al Other Contract Action document preview
  • Umass Memorial Medical Center, Inc. vs. Tufts Health Plan Inc. et al Other Contract Action document preview
  • Umass Memorial Medical Center, Inc. vs. Tufts Health Plan Inc. et al Other Contract Action document preview
  • Umass Memorial Medical Center, Inc. vs. Tufts Health Plan Inc. et al Other Contract Action document preview
  • Umass Memorial Medical Center, Inc. vs. Tufts Health Plan Inc. et al Other Contract Action document preview
  • Umass Memorial Medical Center, Inc. vs. Tufts Health Plan Inc. et al Other Contract Action document preview
  • Umass Memorial Medical Center, Inc. vs. Tufts Health Plan Inc. et al Other Contract Action document preview
						
                                

Preview

COMMONWEALTH OF MASSACHUSETTS WORCESTER, SS. SUPERIOR COURT DEPARTMENT OF THE TRIAL COURT CIVIL ACTION NO. UMASS MEMORIAL MEDICAL CENTER, INC., AMENDED COMPLAINT Plaintiff, vs. FILE TUFTS HEALTH PLAN, INC.; TUFTS ASSOCIATED HEALTH MAINTENANCE ORGANIZATION, INC.; TOTAL HEALTH PLAN, INC.; DOES 1-50, inclusive, JAN 1.2 2021 Defendants. ATTEST yr CLERK PARTIES 1 The plaintiff, UMass Memorial Medical Center, Inc., (“UMass Memorial” or “Plaintiff”) is a Massachusetts corporation with a principal place of business at 365 Plantation Street, Worcester, Massachusetts. 2. Tufts Health Plan Inc., (“Tufts Health Plan” or “Defendant”) is a Massachusetts non-profit corporation with a principal place of business at 705 Mount Auburn Street, Watertown, Massachusetts. 3 Tufts Associated Health Maintenance Organization, Inc., (“Tufts Associated HMO” or “Defendant”) is a Massachusetts non-profit corporation with a principal place of business at 705 Mount Auburn Street, Watertown, Massachusetts. 4 Total Health Plan, Inc., (“Total Health Plan” or “Defendant”) is a domestic profit corporation with a principal place of business at 705 Mount Auburn Street, Watertown, Massachusetts. 7018194.4 5 Plaintiff does not know the true names or capacities, whether individual, corporate, associate, or otherwise, of defendants Does 1 through 50, inclusive, and therefore designates those defendants by the fictitious name Tufts. Each of the defendants sued herein as a Doe is legally responsible in some manner for the events and happenings referred to and proximately caused the injuries suffered by plaintiff UMass Memorial. Plaintiff will amend this Complaint to allege the true names and capacities of these Does when the same become known to Plaintiff. 6 Defendants Tufts Health Plan, Tufts Associated HMO, Total Health Plan, and Does 1-50 are referred to collectively herein as “Defendants.” FACTS 7 In January of 2003, Tufts Associated HMO and Total Health Plan, on behalf of Tufts Health Plan, entered into a Health Services Agreement with UMass Memorial (the “2003 Agreement”).! 8 Pursuant to the 2003 Agreement, UMass Memorial agreed to accept discounted tates from the Defendants for health care services provided to the Defendants’ members in exchange for, among other things, the assurance that the Defendants would compensate UMass Memorial without the need for additional price negotiations or other delays. 9. Effective January 1, 2019, the Parties entered into the 2019-2021 Amendment to the Health Services Agreement (the “Amendment”). 10. Similar to the 2003 Agreement, under the Amendment UMass Memorial agreed to accept discounted rates from the Defendants for health care services provided to Defendants’ ! The 2003 Agreement and the Amendment are confidential, and thus are not attached to this Complaint. The Defendants are in possession of the 2003 Agreement and the Amendment. These documents will be produced in this action once the Court has entered an order protecting confidential information from public disclosure. 7018194.4 2 members in exchange for, among other things, the assurance that the Defendants would compensate UMass Memorial without the need for additional price negotiations or other delays. 11. UMass Memorial has fully performed all of its obligations under the 2003 Agreement and the Amendment. 12, However, the Defendants have continuously and materially breached the 2003 Agreement and the Amendment by: (1) failing to promptly pay claims for health care services provided by UMass Memorial to Defendants’ members and (2) disallowing services and supplies on a line-item basis. As a result of the Defendants’ improper conduct, UMass Memorial has been underpaid by at least $966,995.00, an amount that continues to grow daily. A. Pre-Payment Review 13. The Defendants’ first improper practice, and material breach, relates to a concept known as “pre-payment review.” Under the 2003 Agreement, the Defendants are required to make payments for services provided by UMass Memorial within 45 days of a receipt of completed claims forms. 2003 Agreement, Section IV.1. This language is required by Massachusetts law. See M.G.L. c. 176G § 6; see also M.G.L. c 176. "8 § 8; c. 176B § 7, c. 1761§ 2. 14, After providing medically necessary health care services, UMass Memorial submits an industry-standard UB-04 billing form containing its charges for the care provided to the member to the Defendants’. 15. From 2003 until mid-2017, the Defendants considered and accepted UMass Memorial’s submission of UB-04 billing forms as complete and adequate claim documentation, and paid the claims within the requisite 45 days. 16. Beginning in August of 2017, however, the Defendants began withholding 7018194.4 payment and requesting an itemized bill and/or partial or full medical records prior to paying certain “large dollar” claims. This change caused extensive delays in payments to UMass Memorial for these claims. 17. On May 8, 2020, following a demand letter from UMass Memorial, the Defendants asserted that “every UMass Memorial claim subject to Forensic Review was fully adjudicated (i.e., the undisputed portion of the claim was paid, and UMass Memorial was notified of the reason for nonpayment of any disallowed portion of the claim) within 45 days of receipt of the claim.” 18. Despite the Defendants’ assertion to the contrary, more than 45 days passed on at least 52 claims before any payment was remitted. Attached hereto as Exhibit A is a spreadsheet detailing these 56 claims currently identified.? As Defendants’ improper pre-payment audits continue, the number of claims on this spreadsheet will continue to grow. 19. Not only do the Defendants have no basis under the 2003 Agreement, the Amendment or Massachusetts law for requiring additional records prior to remitting payment, but its actions delay payment in a manner that violates the 2003 Agreement, the Amendment, and Massachusetts law. 20. Section IV.4(C) of the 2003 Agreement and the Amendment requires written notification of modifications to policies and procedures that have a substantial impact on the rights or responsibilities of UMass Memorial under the Agreement. Despite this requirement, UMass Memorial was never notified that the Defendants would begin requiring additional records prior to making payment. ? This spreadsheet has been redacted to remove protected health information. An unredacted version of this spreadsheet has already been provided to counsel for the Defendants, and will be supplemented as additional claims are identified. 7018194.4 4 21. Massachusetts law requires payment of interest at the rate of 1.5 percent per month, not to exceed 18 percent per month for claims paid beyond 45 days from submission. See M.G.L. c. 176G § 6; see also M.G.L. c 176A § 8; c. 176B § 7, c. 1761 § 2. To date, the Defendants have paid UMass Memorial no interest on delayed payments. 22. The Defendants have continuously failed to pay interest on any claims for the past several years, despite the fact that the Defendants continue to pay large dollar claims well beyond the 45 day limit (if at all). B “Line-Item” Disallowance. 23. The Defendants’ second improper practice, and material breach, involves leveraging the Defendants’ pre-payment review audits to impermissibly reduce the payments to which UMass Memorial is entitled by use of a prohibited practice known as “line-item disallowance” (“LID”). 24. LID is a process by which payors review the total charges for a particular invoice and strike charges that they allege should not have been billed by the provider. However, neither the 2003 Agreement nor the Amendment allow the Defendants to unilaterally strike certain charges before calculating payments due to UMass Memorial. 25. The 2003 Agreement, as well as the Amendment, sets forth the agreed Payment Summary for health care services provided to the Defendants’ members by UMass Memorial during the years at issue (the “Fee Schedules”). The Fee Schedules provide for various reimbursement methodologies, depending on the type of care received, the length of the patient’s stay, and the total charges for the services provided to each patient. 26. The term “charges” is an industry-standard phrase that is used in the 2003 Agreement and the Amendment to refer to a hospital’s regular billing rates for items and services 7018194.4 before any discount is applied. Some of the rates in the Fee Schedules are based on a flat per diem (i.e., per day) or case rate (i.e., per service), while others are based on a percentage of UMass Memorial’s charges. In addition, some rates include a “stop-loss” provision, by which high-dollar claims (“outlier claims”) are paid based on a percentage of UMass Memorial’s charges when the charges reach a threshold charge amount (the “stop loss threshold”). If the total charges exceed the stop loss threshold, then Defendants are required to pay UMass Memorial based on a percentage of the charges, rather than on a per diem or case rate. 27. The Defendants have combined the improper practice of pre-payment review of high-dollar claims with LID to selectively reduce the amount of “charges” on high dollar claims. This causes outlier claims to fall below the stop loss threshold, and thus be paid at a lower per diem or case rate for those claims, rather than the agreed percentage of billed charges for outlier claims. 28. Thus, the impact of the Defendants’ LID is far greater than the loss of the individual charges themselves. Moreover, LID defeats the parties’ intent that outlier claims be paid at a higher rate than smaller claims that consume fewer of UMass Memorial’s resources. 29. There is no question as to the medical necessity or appropriateness of the services provided to the Defendants’ members by UMass Memorial. Instead, the alleged basis for the Defendants’ LID is that the disallowed charges supposedly should have been included in some other charge, or “bundled” together when UMass Memorial developed its charge structures. To be clear, the Defendants do not contend that there was a double charge, or that any charge has been duplicated in error. Instead, they seek to dictate how UMass Memorial-sets its charges. There is no authority whatsoever for this practice. 30. The Defendants’ practice of LID violates the express terms of the 2003 7018194.4 Agreement and the Amendment, as well as the implied covenant of good faith and fair dealing. 31. UMass Memorial has objected to the Defendants’ pre-payment review and LID practices on numerous occasions, but the Defendants have failed to change its practices or to pay UMass Memorial the outstanding amounts it is owed. COUNT I BREACH OF CONTRACT (Against All Defendants) 32. UMass Memorial reincorporates each of the proceeding paragraphs as if fully set forth herein. 33. UMass Memorial and the Defendants, entered into the 2003 Agreement and the Amendment, and these are valid contracts between the parties. 34, UMass Memorial performed all its obligations under the 2003 Agreement and the Amendment, except to the extent the actions and omissions of the Defendants frustrated and excused such performance. 35. The Defendants breached the 2003 Agreement and the Amendment by using its improper pre-payment review and LID practices to refuse to promptly and accurately pay for health care services provided by UMass Memorial to Defendants’ members. 36. As a direct and proximate result of the Defendants’ breaches of the 2003 Agreement and the Amendment, UMass Memorial has been damaged in an amount to be proven at trial, but currently exceeding $966,995.00, plus interest at the applicable rate. COUNT I BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING (Against All Defendants) 37. UMass Memorial reincorporates each of the proceeding paragraphs as if fully set forth herein. 7018194.4 38. UMass Memorial and the Defendants entered into the 2003 Agreement and the Amendment, and these are valid contracts between the parties. 39. The 2003 Agreement and the Amendment created express and implied rights and obligations among and between UMass Memorial and the Defendants, including, without limitation, the obligation to act in good faith so as not to deprive the other party of the benefits of the 2003 Agreement and the Amendment. 40. The Defendants breached the covenant of good faith and fair dealing in the 2003 Agreement and the Amendment by failing and refusing to promptly and accurately pay for health care services provided by UMass Memorial to the Defendants’ members and by engaging in improper pre-payment review and LID practices. 41. As a result UMass Memorial has been damaged in an amount to be proven at trial, but currently exceeding $966,995.00, plus interest at the applicable rate. COUNT DI UNFAIR TRADE PRACTICES IN VOLITION OF G.L. c. 93A, §§ 2, 11 (Against All Defendants) 42. UMass Memorial reincorporates each of the proceeding paragraphs as if fully set forth herein. 43. Atall relevant times, UMass Memorial and the Defendants have been engaged in the conduct of trade or business within the meaning of G.L. c. 93A. 44. By its conduct as set forth above, the Defendants have willfully and knowingly engaged in unfair methods of competition and unfair and deceptive acts and practices in violation of G.L. c. 93A §§ 2 and 11. 45. As a result, UMass Memorial has suffered harm and damages for which the Defendants are liable. 7018194.4 WHEREFORE, Plaintiff, UMass Memorial Medical Center, Inc., hereby requests that this Court: 1 Award damages of at least $966,995.00; 2 Award interest pursuant to M.G.L. c. 176G § 6, c 176A § 3 c. 176B § 7, and c. 1761 § 2. 3 Award attorneys’ fees and costs; 4 Award pre- and post-judgment interest; and 5 Any other or further relief as the Court deems just and proper. JURY DEMAND Plaintiff claims and demands ajury trial in any court in which this action is tried. UMASS MEMORIAL MEDICAL CENTER, INC. By its attorneys, Onaga David S. Schumacher, BBO #647917 Katherine M. Dru, pro hac vice admission in process Angela J. Benoit, BBO #703213 HOOPER, LUNDY & BOOKMAN, P.C. 470 Atlantic Avenue, Suite 1201 Boston, MA 02210 Phone: (617) 532-2700 Fax: (617) 345-3927 Dated: January 11, 2020 70181944