State Farm v. 445566
In State Farm v. 445566, filed in 2017, State Farm claimed that Calhoun Ortho would perform surgical procedures at the Surgery Center and, through another corporation called CBO, then pay Medicare rates to the Surgery Center in exchange for purchasing the account receivable. The company called CBO would then send the bill to personal injury lawyers so they could include a large unpaid bill in their settlement offer to settle BI/UM claims. In the event of a settlement from the BI/UM claim, CBO would collect any money since the bill from the Surgery Center was already paid in full.
To be clear, the self-referral took place because the financial interest in the Surgery Center was never disclosed to the patient. Even though Calhoun Ortho was one entity and CBO was another entity, they were still owned by the same people which needed to be disclosed. If the financial interest was disclosed to the patient then State Farm would not have had a case.
DISCLAIMER
This is based on a real court case that was previously filed against a medical provider/doctor. The case number has been partially redacted and names have been changed to protect the Defendants’ names. This example is posted to help educate others on the laws and potential pitfalls. This posting is not intended to embarrass or defame anyone. I have limited the information and simplified some of the facts in the lawsuit to reflect key points and make a complicated case easier to understand. This “example” is directly from a complaint filed by an insurance company; therefore, I am using the facts THEY presented. There are always two sides to a story so please understand this is just one side of the story. This information was found through records available to the public.