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Knoxville-based TeamHealth sued by insurer for “fraudulent conduct” – Tennessee Lookout

Tennessee health billing firm accused in court of "cartel-like" behavior
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An insurer for a Tennessee firm embroiled in a medical overbilling scandal is refusing to pay the tab for what it calls “fraudulent conduct,” court records show.

Ironshore Specialty Insurance Company has filed suit in US District Court against Knoxville emergency medical outsourcing firm TeamHealth. The insurer says in the litigation that TeamHealth wants the company to pony up money to cover a $42 million settlement of overbilling claims in Texas.

“The (Texas settlement) arises from and is based upon fraudulent conduct by TeamHealth in submitting false claims to federal healthcare programs in order to receive payments for services that were not provided and/or medically unnecessary,” Ironshore’s lawsuit stated. “The policy does not cover loss in connection with a claim made against an insured alleging, arising out of (or) based upon or attributable to any wrongful act committed with the knowledge that it was a wrongful act.”

TeamHealth pioneered the outsourcing of hospital emergency medical care and is now one of the nation’s largest emergency medicine providers in the country.

The Knoxville-based firm in recent years has been repeatedly accused in courtrooms across the country of scheming to turn emergency rooms into corporate profit centers through “cartel-like” behavior, including price fixing, legal intimidation and fraud.

In the past two years, TeamHealth has ponied up millions of dollars to settle claims of overbilling emergency room patients, shortchanging doctors and cheating government-subsidized insurance firms but has repeatedly denied any wrongdoing.

TeamHealth is a physician-founded and physician-led network of more than 16,000 frontline clinicians treating patients in emergency rooms, hospitals, and clinics across the country,” the firm said in a statement to the Tennessee Lookout in connection with the overbilling scandal previously reported by the news organization. “The business model that TeamHealth uses to contract with clinicians through separate but affiliated professional entities is widely used by hospitals and other healthcare providers.

“No court or administrative body has ever found that TeamHealth’s relationship with an affiliated medical practice violates a corporate practice of medicine law,” the statement read.

team health sued by its insurance firm

Insure: No notice of settlement given

TeamHealth employees in Texas sounded the alarm on the firm’s alleged overbilling practices in a 2016 federal whistleblower lawsuit, laying bare for the first time TeamHealth’s hidden role in billing and suing patients and accusing the firm of ordering coders to inflate pricing for emergency room medical care for a decade.

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That litigation led a slew of private and government-subsidized insurers to audit their own books, hiring coders to gather patient records from across the nation and examine them for overbilling, court records show. Those insurers then began filing their own litigation, alleging TeamHealth inflated bills by as much as 75 percent nationwide.

In June 2021, TeamHealth entered a $42 million settlement agreement in the Texas whistleblower case. The firm then turned to its own insurers, including Ironshore, to help pay that tab.

But Ironshore alleviates in its litigation against TeamHealth that the firm did not notify the insurer that the Knoxville firm intended to settle the Texas litigation and never gave Ironshore a chance to investigate.

“The (Texas plaintiffs) systematically claimed that TeamHealth used two fraudulent schemes … to submit false claims to the Centers for Medicare and Medicaid services for reimbursement for services performed by healthcare providers at TeamHealth emergency rooms,” the Ironshore lawsuit stated.

“Further, the (Texas plaintiffs) averred that TeamHealth intentionally carried out these schemes to unlawfully obtain grossly overpaid reimbursement amounts,” the lawsuit continued. “Ironshore contends that TeamHealth did not comply with the notice provisions in the policies and never requested Ironshore’s consent for defense costs or to enter into any settlement with the United States and (Texas whistleblowers).”

Ironshore is asking a federal judge to declare “that coverage under the Ironshore excess policy is not available to TeamHealth for its defense and settlement of” the Texas whistleblower litigation. TeamHealth has not yet filed a response to Ironshore’s lawsuit.

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