St. Gregory Retreat Center v. Wellmark Complaint

8/16/2019 St. Gregory Retreat Center v. Wellmark Complaint

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Case

4:16-cv-00259-JAJ-HCA

Document

1

Filed

05/2611-6

Page 1- of 53

In

Tnn

UNrrun

Srarns

Drsrnrcr Counr

Sournnnx

Drsrntcr

0r

Iowe

CBNrnlr.

DrvrsroN

St. Gregory

Retreat

Centers, LLC, St.

Gregory

Recovery

Center,

LLC dlbla

ALPP

Institute,

LLC,

and Recovery

Laboratory

Services,

Inc.,

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

Case No.

Plaintiffs,

COMPLAINT

v.

Wellmarþ

Inc.

d/b/a \ilellmark

Blue

Cross and

Blue

Shield

of

Iowa,

Wellmark

Health Plan

of

lowa, fnc.,

Michael

tr'ay,

and

Debra

Robles,

Defendants.

Plaintiffs

St.

Gregory

Retreat Centers,

LLC

( St.

Gregory''),

St.

Gregory Recovery

Center,

LLC

dlblaALPP Institute,

LLC

( ALPP ),

and

Recovery

Laboratory Services,

Inc.

( RLS ), (collectively

Plaintiffs ),

through its

undersigned

counsel,

hereby

alleges

as

follows

for

its Complaint

against

Wellmark,

Inc.

dlblaWellmark

Blue

Cross

and

Blue

Shield

of

Iowa,

W'ellmark

Health Plan

of

lowa, Inc.,

(collectively

WellmarK'),

Michael

Fay

( Defendant

Fay''

or Fay''),

and Debra

Robles

( Defendant

Robles or Robles ),

(all

collectively

Defendants )

NATURE

OF

TIIE

CASE

L

Through this

action,

Plaintiffs bring

claims

against

Defendants

for breach

of

contract, bad

faith,

unjust

enrichment,

promissory

estoppel,

fraud, negligent

misrepresentation,

and

violations

of

18

U.S.C.

$ i961,

et seq.

(Racketeer Influenced

and

Comrpt

Organizations

Act),Iowa Code

g

706A.2

(Iowa

Ongoing

Criminal

Conduct Statute),

and29

U.S.C.

$

1001,

ef

seq.

(ERISA).

Plaintiffs St.

Gregory

and

ALPP

are

substance abuse treatment

providers located

here

in

lowa. St.

Gregory

provides

both

residential and

ouþatient treatment

services

to

the


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general

public.

ALPP

operates

out

of

a

leased

portion

of

the

Polk County

Jail and

strives

to

rehabilitate

individuals who

are

incarcerated

as

a result

of

substance

abuse

or

non-violent

crimes

related

to

substance abuse, so

that

those

individuals

will

be

less

likely

to

abuse

and

end

up

in

jail

again.

Plaintiff RLS

performs

confirmation drug-testing

services

that assist

St.

Gregory

and

ALPP

in

directing

and

providing

treatment

to

patients.

2. The medical records of

Plaintiffs

patients

almost

universally

reveal

long-term

substance

abuse that

deteriorated

the

patient s

relationships

with friends,

family,

and

society,

oiten

resulting in

the

patient

eventually being

incarcerated

at

taxpayer

expense.

3.

Many of Plaintiffs

patients have

Wellmark

health

insurance

plans. Prior

to

providing

substance abuse treatment

services to these

patients,

Plaintiffs

sought and

obtained

authorization

of

medical

necessity

for care from Wellmark.

4.

However,

because the cost

of treating this at-risk

population

became

more than

Wellmark was

wiliing

to coveq Defendants

have

leveraged Wellmark s

size

and market

power to

engage

in

an

illegal

scheme to conduct

post-service

medical

necessity

reviews and come

up

with

fraudulent

reasons to

deny

payment

for the services that Wellmark

had

pre-approved.

5.

In fact,

Defendants

conducted a

post-service

medical

necessity

review

of

98

patients

claims,

all of whìch

úYellmørk

had

pre approved

as

medìeølly

necessøry,

and

astonishingly

they now argue

that

only one

of

those 98

patíents

øctually

qualiJieilfor

the partíøl

hospítølízatíon

treatm

ent

províded.

6.

Defendants then

used the

results of

this

fraudulent

post-service medical necessity

review

as

a

basis

to

argue

that

none

of

Plaintifß

patients

could

have

qualified

forpartial

hospitalization

care

(which

is

defined

as more than20 hours

per

week

of

outpatient

care).

a

-L-


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7

.

According

to

this fraudulent

post-service

medical

necessity

review,

'Wellmark

would

have

this

Court believe thatvírtuaþ

every

síngle

patíent Plaíntffi

høve

treated-

ìncludíng hundreds of índívíduøIs

incørcerøted

øs

ø

result

of

substønce use

crímes-would

never requíre

partìal

hospítalízøtíon cøre,

which

is more thøn

2A hours

per

week

of outpatìent

treatment

servíces.

8.

Based

on this argument,

Wellmark has now withheld

millions

of dollars

in

payments

that

it contractually

owes

Plaintiffs. In

some

instances, Wellmark

has

already

been

paid

for

Plaintifß'

claims

by

another out of

state

Blue

Cross

and

Blue

Shield

entity

and

is

simply

refusing to

relinquish

the funds

to Plaintiffs.

9.

Defendants'

actions threaten

the very

existence of

Plaintiffs'

businesses,

risking

the

lives

and

recovery chances of

thousands of

lowans who desperately

need

Plaintiffs'

treatment

services.

10.

Through this

action, Plaintiffs seek both

to

stop, and to

, Jorr ,

damages

for,

Defendants'

illegal

scheme to

defraud them out

of the

millions

of

dollars

they

are

owed

for

services

they

have

provided

to

Wellmark's

insureds.

11. The

present

scheme can

be

traced

back

to

}llay

2015,when

Wellmark

submitted

an

annual

rate filing

to

the

lowa

Insurance

Division,

requesting

massive

rate

increases on

the

basis

that

its

members, and in

particular

its members

insured

under

health

plans

compliant

with

the

Affordable

Care

Act,

were using substantially

more

services

than Wellmark

had anticipated.

On

August 25,2015, the Iowa

Insurance Division

approved

significant

rate

increases

for

Wellmark's members.

12.

The

very

same

day that

Wellmark's

rate increases

were approved,

Defendants

began

implementing a

scheme to

limit'Wellmark's

future

exposure and

to recover

on

the

loss

2,


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Defendants

instead

illegitimately

and improperly

withheld money owed

on Plaintiffs' other

claims to

satisfy the alleged

debt.

17.

But

they

did not

stop

there.

Instead, Defendants went

on

to

extrapolate

the results

of

this

98

patient

review,

a

review that

supposedly accounted for the unique

medical condition of

each individual

patient,

on

all claims Plaintiffs

had

billed

for

this outpatient

level of

care

in

the

last eighteen months--constituting hundreds

of additional claims.

Based

on

these

calculations,

Defendants went

on

to

demand

Plaintiffs

repay

Wellmark millions of

dollars

mors.

And,

once

again, when Plaintiffs

refused,

Defendants forced

recoupment

by

illegitimately withholding

payment

on

Plaintiffs'

other claims.

18. In sum,

Defendants

have now

demanded and

forcefully withheld millions

of

dollars of Plaintiffs'

money

under the

nonsensical

theory

that, in each of the

hundreds of

instances

over

the last eighteen

months

in which V[ellmark's nurses determined

medical

necessity

was met and

pre-authonzed

for

this level

of

outpatient

care,

Wellmark had made a

mistake.

19.

On

information

and beliei

the

fraudulent

scheme described

herein

was

orcheskated,

directed, and

overseen by higher-up

Wellmark employees

who

supervise

Defendants

Fay

and

Robles.

To the

extent

Plaintiffs

are

cu¡rentlyunable

to identi

all

of the

individuals

within'Wellmark who

orchestrated

and

participated

in

this

scheme, such

information

is wholly

within Defendants' control

and will be revealed through

discovery.

20.

On

information

and

belief,

the

Wellmark

employees

involved

in the

schemes

to

defraud

Plaintifß,

inqludqng Deferrdants Fay

and Robles,

engaged

in the conduct

described

herein

not only

for

the

benefit of Wellmark,

but also

in

an effort to maintain or

increase

their

positions

within

Wellma¡k.


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21.

This scheme

is not

new.

In fact,

Defendants

Fay and Robles carried

out

a

similar

scheme,

defrauding

and

inducing

St.

Gregory

into

a settlement

in

2013

on

St.

Gregory's

then-

outstanding claims

for payment. And,

Defendant Robles

and others

within

Wellmark

have been

accused

of engaging

in

similar conduct

in

the

past.

Simply

put,

Defendants

Fay

and

Robles,

along with other

Wellmark

employees to be

identified

later,

have

shown that

without

the Court's

intervention,

they will

continue

to

conduct

the

affairs of

'Wellma¡k

through

acts

of

fraud

and

deceit.

PARTIES

22.

Plaintiff St.

Gregory

is a limited

liability

corporation

duly organized

under the

laws of the

State

of

Iowa

with its

principal

place

of business

in

Des

Moines,

Iowa.

23.

Plaintiff

ALPPr

is

a

limited

liability

corporation

duly

organized

under

the

laws of

the

State of

Iowa with

its

principal

place

of business

in Des Moines,

Iowa.

24.

Plaintiff

RLS is

a

corporation

duly

organized

under

the

laws of the

State

of

Iowa

with

its

princþal

place

of

business

in

Omaha,

Nebraska.

25.

Defendant

Wellmark,

Inc.

is

a

corporation

duly organized

under

the

laws

of

the

State

of

lowa with

its

principal

place

of business in

Des Moines,

Iowa.

Wellmark,

Inc.

does

business

under the

name

Wellmark

Blue

Cross and

Blue

Shieid

of

Iowa.o' Wellmark

is

an

independent licensee of the

Blue Cross and

Blue Shield Association

( BCBSA )

and

is licensed

by the

lowa

Division of

Insurance.

26.

Defendant

Wellmark

Health Plan of

lowa,

Inc.

is

a

corporation

duly

organized

under

the laws of

the

State of

Iowa

with

its

principal place

of business

in Des

Moines,

Iowa.

1

St. Gregory

Recovery

Center,

LLC dlblaALPP

Institute

( ALPP ) formerly operated

as

St.

Jude

Thaddeus Retreat

House, LLC.

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Wellmark

Health Plan of

Iowa, Inc.

is

an

independent

licensee of

the BCBSA and

is licensed by

the

Iowa

Division

of Insurance.

27.

Defendant

Michael

Fay ( Defendant

Fay''

or

Fay'')

is

Vice

President

of

Wellmark's

Health Networks division

and, on

information and

belief

resides

in

Polk

Count¡

Iowa.

According to

'Wellmark's

website,

Fay is involved

in

V/ellmark's

strategic

initiatives,

including

product

pricing,

innovation around

product,

networks and distribution,

health

care

reform, and strategic

consulting

with

key accounts.

28.

Defendant Debra

Robles

( Defendant

Robles

or

Robles )

is Senior

Investigator

of'Wellmark's

Special Investigations

Unit

and,

on

information

and

belief,

resides

in

Dallas

County,

Iowa.

On information

and

belief, Robles is the most

senior

member

of Wellmark's

Special

Investigations

Unit.

JURISDICTION AND VENUE

29.

This

Court has subject matter

jurisdiction

over

this action

pursuant

to

28

U.S.C.

$

1331 because

Plaintiffs

assert

claims that arise under the laws

of

the

United

States,

and over

Plaintiffs'

state law claims

pursuant

to

28

U.S.C.

$

1367.

30.

This

Court

has

personal

jurisdiction

over

Defendants

and

venue is

proper

in this

District

pursuant

to

28

U.S.C.

$

1391 because

a substantial

part

of

the

events

or omissions

giving

rise to the claims occurred

in this

judicial

district.

FACTUAL ALLEGATIONS

A.

Ptaintiffs Provide Substance

Abuse Treatment

Services

to

At-Risk

Individuals

3I.

St.

Gregory opened

in

January 2A07 witbthe

mission of offering

the

most

successful,

proprietary,

and evidence-based

therapies

available

for

those

who

struggle with

f


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addiction. tts

mission is to

empower

people

to

fransform

their lives

through

faith,

hope,

and

compassion.

32.

St.

Gregory provides private

residential

substance

abuse

treatment

services

as

well

as outpatient

treatment

services and

serves

both

Iowa

residents

and

out-of-state

residents.

The

average

length of

stay

for

a

patient

at St. Gregory

is

seven

to eight

weeks.

33.

Due to the intensive

nature

of St.

Gregory's treatment

program,

it

is

not

uncommon

for

a

St.

Gregory

patient's

total

cost

of care

to exceed

tens of thousands

of

dollars.

34.

St. Gregory

provides

five

levels

of care

to

patients,

depending

on the

patient's

condition and

diagnosis.

The

five levels of

care,

from

most

intensive

to least intensive,

are:

r

Detoxification;

r

ResidentialServices;

o

Partial

Hospitalization

Program

( PHP')

(a

patient

assigned

PHP

receives

at

least

20

hours of outpatient

care

per

week);

r

Intensive Outpatient

Program

(*IOP )

(a patient

assigned

IOP

receives

9-20 hours

of

ouþatient care

per

week

(typically

t hours)); and

r

Outpatient

Care

( OP ) (a

patient

assigned OP

receives less

than t

hours of

outpatient

care

per

week

(typically

2 hours)).

35.

In addition

to

managing

and administering treatment

services

to the

general

public,

St.

Gregory staffalso

manages

and

administers

ALPP's treatment

program.

36.

Since

2014, ALPP has

leased

avacantwing

of

the Polk County

Jall,

providing

a

substance

abuse

treatrnent

program

fbr

individuals released

from incarceratisn

at

the Polk

County Jail or transferred

to the Polk

County

Jail

from

other facilities.

-x-


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37.

ALPP was developed

to

rehabilitate those individuals caught in the criminal

justice

system and

facing often severe

legal

consequences as a

result

ofsubstance

abuse

or

non-

violent

crime related

to

substance

abuse.

These

individuals

often

have

low

success

rates

in

traditional substance

abuse treatment

programs

and

high rates

of

recidivism,

relapse, and

poor

employment

outcomes. Without

the

appropriate

level

of

care,

this

population

all

too

often

ends

up

at

best,

re-incarcerated,

and at

worst,

dead.

38.

As

part

of its mission,

ALPP

assists individuals

in

combating

substance abuse,

learning

coping

strategies

for life, finding

meaningful

emplo¡rment,

paylng

child

support

and

court fines,

finding

permanent supportive housing,

and

re-uniting

families.

39.

ALPP s

treatment

program

reduces

the county

jail

census

and

lowers the chance

of

recidivism

through

a

unique

combination

of

substance

abuse

treatment,

jail

diversion, and

community reintroduction.

This

program

has

resulted

in a

significant

economic

benefit to

the

citizens

of Polk

County.

40. ALPP is a

year-long

program,

the

first

seven to

eight

weeks of

which.a

participant

is en¡olled

in a cognitive

behavior

therapy

substance

abuse

treatment

program.

ALPP

has

an

average

daily census

ofover 200

patíents.

41.

Diversion to

ALPP

occurs

only

pursuant

to

an

Iowa District Court

order.

ALPP

receives referrals from

district

courtjudges,

county attorneys, defense attorneys,

assessment

agencies,

and

many

inmates

selÊrefer.

Prior

to

diversion,

potential participants

are evaluated by

Certified

Alcohol

and Drug Counselors

(CADCs)

for

substance

abuse

treatment admission.

In

making its decisions, ALPP CADCs conduct

a

bio-psycho-social

interview,

mental

health

scrgen,

and

a

Substance

Abuse Subtle

Screening

Inventory.


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42.

In order to

meet the Court's

hearing

schedule

and

provide

the information

required for

a

court-ordered

treatnent

plan,

ALPP

often

must conduct

treatment

evaluations

while

an

inmate

is

still

incarcerated,

which

can be

up

to

three

months before

an

inmate is

released

to

enter

ALPP's

treatment

program.

43. St.

Gregory

and

ALPP

have been

very successful

in

treating

addiction,

and

their

programs

have

resulted in

an unmatched number of documented

outcomes.

44. In20l5, ALPP

had an

84% completion rate

with

more

than9}o/o

of

graduates

remaining

sober

following

treatment.

The

recidivism rate among

ALPP

participants

is

8olo, well

below

national

recidivism rates for offenders.

45. In

addition,

St. Gregory

and

ALPP

report

abstinence

rates

in

excess

of 80%

three

years

following

completion

of

their

programs.

B. Plaintiffs

Entered into

a

Number

of

Provider

Agreements

with

Wellmark

46.

On

or

around

I|l{.ay

12,2010, Vfellmark,

Inc.

entered

into a

Facility

Services

Agreement with

ALPP,

under

which ALPP agreed

to

provide

health

care

services

to Wellmark,

Inc.'s

insureds,

and

in

return, Wellmark, Inc. agreed to

provide

payment

to

ALPP for

such

health

care services,

subject

to

the terms

and conditions

therein.

A copy of this

agreement

is attached

hereto as

Exhíbít

A.

47.

On or around

December 28,20L0, Wellmark

Health Plan of

Iowa, Inc.

(the

HMO ) entered

into

a

Facility

Services

HMO Agreement

with

ALPP, under

which

ALPP

agreed

to

provide

health

care

services

to the

HMO's

insureds,

and

in return, the

HMO

agreed

to

provìdg

payment

to ALPP

for

such

health

care

services, subject to

the

teqms

and conditions

therein.

A copy

of

this agreement is

attached

hereto as

Exhibít

B.

-

ttt

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48. St.

Gregory

and

RLS also entered

into

Facility

Services

Agreements

with

Wellmmk,

tnc. and

Wellmark

Health

Plan

of

lowa,

Inc. These agreements

contained

substantially

similar provisions to

those contained

in

Exhibits

A

e,

B.

The

Facility

Services

Agreements

entered

into by St.

Gregor¡

ALPP,

RLS, Wellmark,

Inc., and

Wellmark

Health

Plan

of lowa,

Inc. are all

collectively

referred to herein

as

the

Wellmark

Agreements.

49,

Among

other things,

the

Wellmark

Agreements

$

6.2

require Plaintiffs

to

provide

covered

services

to one of

Wellmark's

insureds

when

the insured

presents

a

valid

Wellmark-

issued identification

card

or

Wellmark

verifies

the

insu¡ed's eligibility.

50.

Among

other

things, the

Wellmark

Agreements

$

6.3

require

Plaintiffs

to

provide

covered services

to any

person

covered

by another

licensed

Blue

Cross and

Blue

Shield

Plan

or

HMO and to

submit such

claims

for

payment

to

Wellmark

for

adjudication.

51.

Among

other things, the

Wellmark

Agreements

$

8.i require

Wellmark

to make

payment

to

Plaintiffs,

subject

to

the terms

and conditions

of the

Wellmark

Agleements,

and

in

accordance

with

the terms and

conditions

of various

other Wellmark

documents.

52.

Among

other things, the

Wellmark

Agreements

$

8.9 require

Wellmark

to

pay

o'clean

claims,

as

that term

is

defined

under

Iowa law, within

30 days

of receþt

of

the claim.

53.

Iowa law defines

a

clean

claim

as

o'a

properly

completed

paper

or electronic

billing

instrument

containing

all reasonably necessary

infonnation,

that does

not

involve

coordination

of benefits

for third-party

liabilit¡

preexisting

condition

investigations,

or

subrogation,

and

that does

not

involve

the existence

of

particular

circumstances

requiring

special

treatment

that

prevents

a

prompt

payment

from

being

made.

Iowa Code

$

5078.44(2Xb)

(201s).

-

tt

-


12/118

Case


Document 1 Filed 05126116

Page 12 of 53

54. The

Provider Guide issued

by Wellmark,

and

incorporated

by

reference

into

the

Wellmark Agreements

$

14.3, states

that Wellmark's

behavioral

health

staff shall use

the

InterQual@

clinical criteria in

evaluating

the

medical

necessity

of behavioral health

and

chemical

dependency treatment.

55.

Medical

necessity

generally

refers

to

the

clinical

appropriateness

of specific

medical

services

based on a

patient's

condition and

symptoms.

56.

The InterQual@

Behavior

Health

Decision

Support

Tool, created

by McKesson

Health Solutions,

is the most

widely

used screening

tool

for

medical

necessity

utilized

by

payers

and

providers in

the industry.

57,

The

InterQual@

$upport

Tool

uses

standardized

criteria

( InterQual@ Criteria )

designed

to

provide payers

and

providers

a

process

by

which to achieve

consistent, evidence-

based clinical

decision-making.

C.

Plaintiffs

Provide Services

to

Wellmark's

Insureds and

are

Assigned

the

Right to

Collect

Benefït Payments

From

Wellmark

on the

Insureds'

Behalf

58.

Many of Plaintiffs'

patients

are insured under

a

Wellmark

heal.th

insurance

plan

(*Wèllmark

Plan ).

59.

Some

of

Plaintifß'

patients

are covered

under

a

Wellmark

Plan

that constitutes

an

employee

welfare benefit

plan governed

by

the

Employee Retirement

Income Security

Act of

1974,29 U.S.C.

$

1001, et seq.

( ERISA ),

Wellmark

is

a

fiduciaryunder

ERISA

withrespect

to these

plans.

60.

--

Otherpatients

are-covered

under-either-individual-Wellmark

Plans,or

another-olt.

of-state

BCBSA licensee's

insurance

plan

for

which

Wellmark

coordinates

claims

submissioni

and

payment,

'ta


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53

61.

When

a

patient is insured

under

a

plan

insured

or administered

by

a

BCBSA

entity

outside

of

lowa, Wellmark

acts

as

the

ooHost

Plan,"

while the

BCBSA

entþ

that

actually

insures

or administers

the

health

insurance

plan

serves

as

the

"Home

Plan."

As

the Host Plan,

Wellmark

accepts

and

processes

Plaintiffs'

claims

for

payment. The

Home

Plan,

however,

is

responsible

for determining

whether

the services

provided

are

covered

under

the

insured's

insurance

plan

and decides

whether

to authorize

the

Host

Plan

to

pay

the

benefits

to

Plaintiffs.

While

the

Home

Plan

is

financially

responsible

for

paying

such

benefits,

the Home

Plan

transfers

such

payrnents to

the

Host

Plan

(Wellmark),

and

the

Host

Plan

(Wellmark),

then

pays

Plaintiffs.

62.

On

March

23,20 A,President

Obama

signed

the

Patient

Protection

and

Affordable

Care

Act

("ACA"),

42 U.S.C.

$

18001

et

seq.

(2010) into

law.

Under

the

ACA,

all

health

insurance

plans

sold

on

a

health

insurance

exchange

are

requfued

to

provide

ten

categories

ofessential

health

benefits,

one

ofwhich

is substance

use

disorder

services.

63.

Although

Wellmark

elected

to

wait

until

late-2015

to

announce

it

would

jOin

an

exchange

(starting

with

the

fall2016 open-enrollment

period),

Wellmark

has offered

ACA-

compliant

health

insurance

plans

since

2014.

64.

prior

to

August

2015, some

of St. Gregory

and

RLS's

patients, and

the

vast

majority

of

ALPP's

patients,

were

covered

under

an ACA-compliant

Wellmark

Plan.

65.

Upon

enrolling

in

a treatment

proglam,

each

patient

enters

into

an agreement

through

which

the

patient

authorizes

Plaintiffs'

to

act

on the

patient's behalf

with

respect

to

submission

of

insurance

claims

and assigns

to Plaintiffs'

the

patient's right

to collect

such

benefit

payments.

66.

In order

to

serve

its

goal

of

providin

I

careto

this

at+isk

population,

and

to

benefit

the State

of

lowa,

the agreernent

also

provides that,

in

the event

the

patient's insurer

does

not


14/118

Case

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53

cover

the

services

provided,

the

patient

is only

responsible

to

pay

St. Gregory

a heavily

reduced

rate, and

the

patient s total out ofpocket

expenses

is capped.

D.

Defendants

Defrauded

St.

Gregory,

Forcing

a

Claims

Settlement

in

2013

67 .

In

or around2017,

and without

prior

notice, Defendant

Robles

suddenly

began

conducting

a

post-service medical

necessity

review

on

a

number

of

St.

Gregory s

claims

for

payment.

68.

Defendant

Robles

directed and/or

participated

in

this

post-service

review

by

mailing

requests

for

patient

medical

records to

St.

Gregory s

then-billing

service

company,

located

in Florida.

69.

Defendant

Fay, who

was

and

continues

to

be St.

Gregory s

primary

contact

person

at

Wellmark,

sent

numerous em¿ils

and

letters

to

St. Gregory,

purporting

to

provide

the

results of

this

ongoing

medical

necessity

review.

70.

In

most

instances,

Defendant

Fay reported

that

Wellmark

sent

the

medical

records

to

an

extemal

review

agency,

and

that the

agency

had determined

that

the

level

of care

provided

by

St.

Gregory

was

not

medically

necessary.

As a result,

Defendant

Fay told

St.

Gregory

that

these

claims would

not

be

processed,

but

would

continue

to

pend

for

review untii

St. Gregory

resubmitted

the

claims at

a

lower

level

of care.

71.

St.

Gregory

disagreed

with

these determinations.

After

numerous

communications

back

and

forth, Defendant

Fay agreed

to

meet

with

St.

Gregory

staff

members

to review the

results from

the

post-service

review.

72.

Despite

St.

Gregory

staff

members

requests,

Defendant

Fay

refirsed

to-provide

St.

Gregory

with

copies

of the

post-service

reviews.

-i4-


15/118

Case


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15 of 53

73.

On

information

and beliet

based

on

Defendant

Fay's

refusal

to

provide

copies

of

the

post-service reviews

and

Defendants'

current

conduct,

the

post-service reviews

were

fraudulently

conducted

and

carried out

by

Defendants Fay

and

Robles

as

a

way

to

force

St.

Gregory

to accept

less

money

than

it

was

owed

for

its

then-outstanding

ciaims

for

pa¡rment.

74.

Additionall¡

by

refusing to

provide

St.

Gregory

copies

of

the

post-service

revierils,

Defendant

Fay

withheld

the information

that

would

have

allowed

Plaintifß

to

effectively

dispute

the

denials.

75.

This

post-service

review

continued

for

nearly eighteen

months,

placing

considerable

financial

pressure

on St.

Gregory.

76.

As a result

of this

{inancial

pressure, in

October

2013,

St.

Gregory

entered

into

a

Settlement

Agreement

(the

2013

Settlement

Agreement )

to resolve

the

dispute,

whereby

Wellmark

agreed

to

pay

St.

Gregory

a

sum

of

money

in

exchange

for a

release

of St. Gregory's

then-outstanding

claims

for

payment.

77.

Through

the

2013 Settlement

Agreement,

St.

Gregory

recovered

just

a fraction

of

what

Wellmark

owed

on St, Gregory's

then-outstanding

claims

for

payment.

78.

In or

around

Late-2Ol4,RLS

and

Wellmark

also entered

into a

settlement

agteement

whereby

Wellmark

agreed

to

pay

RLS

a

sum

of

money

in

exchange

for

a

release

of

RLS's

then-outstanding

claims

for

payment.

79.

Around

this same

time, St. Gregory

staff

members

worked

with

Weilmark

to

develop

Wellmark's

drug

testing

policy.

The

policy

set

forth

guidelines regarding

frequency

and

composition

of drug

testing.

E.

The 2013

Settlement

Agreement

Estabtished

a Precertification

Proeess

that

the

Parties

were

Contractually

Required to

Follow

aÊ

-

lJ

-


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17/118

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Page

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53

r

Wellmark

will

utilize

InterQual criteria

for evaluation

of

all

levels

of

care

(Acute,

Residential,

Partial

Hospitalization

and

Intensive

outpatient).

r

If medical

necessity

is met

for the

admission,

the

nurse

will

authorize

a specific

number

ofdays.

.

If medical

necessity

is not

met

for

the

admission,

the

information

will

be

forwarded

to

the

Medical

Director

for

review.

A

decision

will

be

communicated

to

St.

Gregory's

following

this

review.

r

If additional

days

are needed

at

the

end

of the

authorized

period,

St.

Gregory's

wili

need

to

provide

Wellmark

with

updated

clinical

information

1-2

days

prior

to

the

end date

for

a

continued

stay

review

to be

completed

. .

.

lnterQual

criteria

will

be

utilized

to

determine

medical

necessity.

r

This

process

will continue

until

patient is discharged

and/or

medical

necessity

criteria

is

[sic]

no longer

met.

r

Wellmark

will

request

medicai

records

for

cases

to support

how

many

days

we

determined

were

medically

necessary,

verify the

information

collected

during

the

pre-certification

process

is

appropriate,

and

the services

billed

are consistent

with

the

services

precertified. Wellmark

will

perform

post

pay

review

on

100

percent

of the

cases

for

the

first

90 days

following

implementation

of this

process and

then

move

to a

sample

of

claims

on a

quarterly

basis

if

no

issues

are

identified

during

the

first

90

daYs'

83.

The

statement

contained

in Exhibit

2 thatthe

medical

necessity

review

is

not a

guarantee

of

payment or

coverage,

tecognízes

that

there

may

be

situations

in which

medical

necessity

is met,

but

St.

Gregory

will

still

not

receive

payment

because

either

the

patient's

policy

a-


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Case 4:16-cv-00259-JAJ-HCA

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Page

18

of

53

does

not offer

the

level ofcoverage

for the authorized

care, or because

the

patient's policy

for

out-oÊnetwork

providers has

high

deductibles

and co-pays

which

a

patient

may

fail

to

pay.

84.

Following

the

parties'

2013 Settlement Agreement, St. Gregory staff

members

have

followed the

precertification

and

concurrent

review

process

set

forth

in

Exhibit

2. T\e

same

process

was

followed

regardless

of

whether

an

individual

was

a

patient

of St.

Gregory

or

ALPP,

85.

Accordingly,

prior

to admitting

a

patient,

a

member

of

St.

Gregory's

staff

contacted

Wellmark's

Utilization

Management

nurse team

to

seek a

determination

that

a specific

level of

care

was

medically

necessary and thus

precertified

by

Wellmark.

86.

To

obtain

precertification,

a

St.

Gregory

staff

member

provided

a

Wellmark

Utilization

Management

nurse with

a

description

of

the

patient's

diagnosis,

and

Wellmark's

nurse then

had the opportunity

to

ask

questions

regarding

the clinical

status

of the

patient. Using

InterQual@

Criteria,

Wellmark's

nurse

conducted

a

structured

interview

to

determine

whether

the

requested

leve1 of care

was

medically

necessary

87.

Based on

the

results of the structured

interview,

Wellmark's

nurse

made

a

medical

necessity

determination.

If the

services

were

precertified, the

Wellmark

nurse

would

provide

a

precertification number

to the St.

Gregory

staff

member either

by

phone

or

in writing.

88.

Additionally,

Wellmark's

Heath

and Care

Management

team

mailed

St. Gregory

a

letter confirming

precertification for

a

specific

level

of

care.

An

example

of

one

such

letter

that

was mailed

to St.

Gregory

is attached

hereto

as

Exhibit

D.

89.

In

part,

the

precertificatíon

letters

stated

th¿t

Wellmark

had

revigwedthe

clinical

information

submitted

with

the

precertifïcation request

and

determined

that

the

treatment

is

medically

necessary.o'


19/118

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of 53

90.

The

letters

also

Provided

that:

This

precertification approval

is

not

a

guarantee

of benefits.

Wellmark

may

conduct

a

post-service

review of

medical

records

to confirm

the

records

document

the

servicei

subject

to the

approved

precertification

request.

The

medical

records

also

must

s,;ppott

the

level of

service

billed

and

document

that the

services

have

been

provide¿

Uy

ttre

appropriate

personnel

and

with

the

appropriate

level of

supervisíon.

gL.

The letters

confirming

precertification

did

not state

that

Wellmark

could

later

review

and

change

its mind

as to the

decision

being

communicated

in

the

letter-that

the

specific

level

of

care

was

deemed

medically

necessaïy

by

Wellmark

92.

After Wellmark s

nurse

provided precertification for

a

specific level

of

care, St

Gregory

provided

substance

abuse

treatment

services

consistent

with

that

which

was

verified and

approved

by

Wellmark,

and

in

reliance

upon

Wellmark s

representation

that

it

deemed

such

services

medically

necessary.

93.

Because

Wellmark s

Utilization

Management

nurses

precertified treatment

for

a

specific

level of

care

for a

specified

number of

days,

this

precertification

process

was

often

repeated

multiple

times

for

a

single

patient.

For

instance,

upon

admitting

a

patient,

St.

Gregbry

would

contact

a

Wellmark nurse

to

obtain

approval

for

a

specific

level

of

care,

such

as

PHP,

and

Wellmark s

nurse

would

precertify

that

level

of

care

for

a certain

number

of days.

After

the

precertified days

of

treatment

were

provided,

St.

Gregory

would

again

contact

a

Wellmark

nurse

to request

either

additional

treatment

days

at

the

same

level

of care,

of

to obtain

precertification

for

a

lower

level

of care,

such

as

IOP.

The

St.

Gregory

staff

member

again

provided the

Wellmark

nurse

a

description

olthepatientls

diagnosis,-and-Vlellmark1s nurse

was

then

ahle

ask

the St.

Gregory

staff

member

questions

regarding

the

clinical

status

of

the

patient. This

process

of

ongoing

precertification

continued

until the

patient was

discharged

or

moved

to a

level

of care

that

did

not require

precertification.

-79-


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Case 4:16-cv-00259-JAJ-HCA Document L Filed 05126116

Page 20 of

53

94.

Consistent

with

the

te¡ms

of the

2013

Settlement

Agreement,

Wellmark

did

perform

a

post-service

review

on

1 00

percent

of St.

Gregory s

claims

for the

first

90

days,

and

conducted

a

similar review

on a sample

of

claims

thereafter.

Wellmark

did

not

raise any

significant

concerns

regarding the

results

of

those

reviews

at that

time.

95.

Despite

the

fact that

St.

Gregory

provides inpatient

residential

treatment

services

to

patients, Wellmark

has never

reimbursed

St.

Gregory

for

that

level

of

care. Instead,

Wellmark

has

directed

St.

Gregory

and

ALPP

to

bill

residential

level

services

as

PHP

services,

the highest

outpatient

level

of

care.

96. Because

St.

Gregory

and

ALPP

believe

residential

treatment

services

are

in

many

instances

medically

necessary,

St. Gregory

provides Wellmark s

insureds

inpatient

residential

care,

even

though

it is

only

reimbursed

at

outpatient

rates.

97.

The

amount at

which Wellmark

reimburses

St.

Gregory

and

ALPP

for

PHP

services

is

roughlyhalf

of

the

typical

residential

reimbursement

rate.

Similarly,

IOP services

are

reimbursed

at

roughly

one-half

the

rate of PHP

services.

98.

Like

St.

Gregory

and

ALPP,

many other

insurers

recognize

that

inpatient

residential

treatment

is often medically

necessary,

and thus

reimburse

such

treatment

services

at

inpatient

rates.

F.

By Early

zlts,Wellmark

Determined that

it

had

Vastþ

Underestimated

the Cost

to

Deliver

Services

to

the

Population

Enrolled

in

its

ACA-Compliant

Plans

gg.

In

May

z}ls,Wellmark

filed with

the

Iowa

Insurance

Division an

annual

individual-healthinsurance-premium

rate-filing-for-Wellmarkls-AGA-eompliant-indi-vidual-pians.-

100.

InitsMay20l5

filing,Wellmarkproposedarateincreaseof

anaverage

of26.50/o,

across 23,000

policyholders,

effective

January

l,2416.

-20 -


21/118

Case

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Page 21 of

53

101.

In

conjunction

with its May

2015 filing,

Wellmark

also

published

a

rate

change

whitepaper in

which

it

outlined

its bases

for

requesting

the

rate increase.

(Available

at

b þsi/lweb.archive.orq,/web/20160404061512/littp:/lwww.wellmark.com/AboutWellmgrky'Newsr

oom/Documents/20

I 6 Ratçs_WhitePaper.pdf

)

In

parl,

Wellmark

statsd:

Our

ACA

members

are using

substantially

more

services

and

are

receiving

care

for

more

chronic

and

critical diseases

than

we

anticipated.

The

number

of

members

with

large claims

(over

$50,000)

is more

than

18

percent

higher

than

the

baseline

population ... Based

on

the anticipation

of

pent

up demand

for health

services

ànd

the

rich

set

of

benefits

included

in the

new

ACA

pians, it was

assumed

that

members

in

those

plans

would use

about

30

percent

more

services

than

we

have

seen

with

members

in

past plans. Howevet,

this

group

of

members

actually

used

almost

double

what

we anticipated'

IO2.

On AugUst

25,2015,the

Iowa Insurance

Division

approved

an

average

rate

increase

of

24.5Yo

on

these

ACA-cornpliant

individual

plans.

G. To

Limit its

Future

Exposure,'Wellmark

Immediately

Moved

to

Eliminate

Plaintiffs'

Patients'

Access

to

\ilellmark

Plans

103.

In order

to

assist

patients

who

do not already

have

health

insurance

coverage,

St,

Gregory has

partnered

with

licensed

insurance

brokers,

who explain

various

policies and

coverage

options

to

patients

and

then

assist in enrolling

the

patient

in the

policy of

the

patient's

choosing.

104.

In

Novemb

er 2014,

St. Gregory

began

partnering

with

Group

Benefits,

Ltd'

("Group

Benefits"),

a health

insurance

general

agency,

whose brokers

enrolled

many

of

St'

Gregory's

patients in ACA-compliant

Wellmark

Plans.

105.

On

August

25,2015,the

same

day

Wellmark's

2016

rate

increase

was

approved,

Cathy

Mears

("Mears"),

an

insurance

agent

from

Group

Beaefits,

sudderrly

and

without

priol

warning,

contacted

St.

Gregory

to relay

the

following

information:

"Effective9/l

and

afte4

Wellmark

will

no

longer

rec,ognizerelease

from

incarceration

as

[triggering

a]

special

enrollment

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period.

Any

application

with

a signature

date

of

9/1

or

after

will

not be

honored

and

wil1be

returned

to

the agent.

106.

Mears

already

had

meetings with

ALPP

participants

scheduled

on August

28

and

30,

at which time

she

was

to enroll

the

participants

in

Wellmark

Plans'

I07.

On

August

28, Mears

again reached

out

to

St. Gregory,

this

time

to

pass

along

information

that Wellmark

had

amended

the effective

date of

the

special enrollment

policy

change

to August

29-that

very same

day.

108.

As of

August

28, Mears

had five ALPP

participants' enrollment

applications

in

her

possession

that she

had

not

yet

submitted to

Wellmark

for

processing.

kt addition

to

the

completed

applications,

Mears

had

ernollment

meetings

scheduled

with

20 more ALPP

participants

prior

to September

I,

2015

.

109. Between

August

28 and

August 30,

St.

Gregory staffmade

multþle

attempts

to

contact

Mears to check

on the

status of these

applications

and

meetings,

but

the St.

Gregory

staff

received

no

response.

1 1

0.

On

August 3

l,

St.

Gregory received

an

abrupt

email from

Mears stating

only that

Group

Benefits

had decided

not to

particþate

with

St. Gregory's

program

going

forward.

111.

Mears

never submitted

the

five

completed

ALPP

participants'

enrollment

applications

to

Wellmark

and

she

never met

with

the other

20 ALPP

participants she

had

meetings

scheduled

with.

ll2.

In

addition

to

St.

Gregory's

attønpts

to

contact Mears,

on August

28,

St.

Gregory

also reached

out directly

to Defendant

Fay in an attempt

to understand

Welknark's

sudden

change

in

policy.

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113.

One

week

later, on

September

4,2015,

Defendant

Fay responded

in

an email

to

St.

Gregory,

reiterating

that Wellmark

had

changed

its enroilment

period policy

but

that

Wellmark

would

accept

any

enrollment applications

dated

through

August

28.

lI4.

After

St.

Gregory

staff

made another

plea

to

Defendant

Fay to enroll

the25 ALPP

participants Mears

had

previously

arranged

to enroll,

Defendant

Fay

held

a

phone

conference

with

St.

Gregory

staff on September

10,

during which

Fay

prodded

the St. Gregory

staff

members

for additional

facts

he could

use

to

support denying

the25 applications.

115.

A month

later, on October

9,

Defendant

Fay mailed a

letter to

St.

Gregory

in

which Fay

informed

St.

Gregory that

Wellmark had

received

25 ALPP

participants

applications

but

was

not accepting any

of them.

Fay

stated

that

Wellmark

did

not

have

copies

of any

applications

ALPP

participants

submitted

to

Mears, but that if Wellmark

were

to receive

them,

Wellmark

would consider

them.

1 16.

Because

other

insurance

providers

only

recogni

ze

a 60-day

special

enrollment

period

for

individuals

released

from incarceration, by

the time Wellmark

finally rejected

these

25

ALPP

participants

applications,

the

participants

were no

longer eligible

to

seek

alternative

insurance

coverage.

ll7.

Also as a

result, and

in

furtherance of

its mission

to

provide

care to

this at-risk

population

and

to benefit the State

of

lowa,

St. Gregory

incurred

the

expense

of

providing

treatment

to these

patients

until

they were able

to obtain health

insurance

during the

annual

enrollment

period,

with

coverage

beginning

January t,2016.

118,

After

Welhnark

rescinded

its special

enrollme,lrt

polic¡

ALPP

participants

were

only

able to enroll

in

Wellmark

Plans

during

the annual

enrollment

period,

with

coverage

beginning

each

January

1.

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H. In

an

Attempt

to

Recover From the Failed Financial

Projections, Defendants

Fay

and

Robles Immediately

Began

Conducting Another

Scheme

to Defraud

Pl¡intiffs

126.

After

determining

that'Wellmark

had

vastly underestimated

the

cost

to care

for

the

population

en¡olled

in its AcA-compliant Plans,

and

with

its

rate increase approved,

Wellmark

employees

began

carrying out a

scheme

to defraud

Plaintiffs out of the

money

Wellmark owed them.

127.

Just

as they

had

done

since

the fall

of

201.3,

throughout the

fall

of 2015,

St.

Gregory

staff

continued

following

the

precertification

and concurrent

review

process

detailed

in

Exhibit

2

to

the201

3 Settlement Agreement.

128. However, on

August

14,2015,

and

without

any

advanced

warning,

in

response

to

a routine call for

precertification,

Wellmark's Utilization

Review Manager suddenly

informed

a

St. Gregory

staff

member that the

requested

level

of care

was

not medically

necessary

under

criteria

developed

by

The American Society

of

Addiction

Medicine

( ASAM

Criteria').

129.

The

St. Gregory

staff

member

pointed

out the

impropriety

of

applying

ASAM

Criteria-both

under the

\il'ellmark

Agreements,

which

require

application

of

InterQual@

Criteria,

and

on

the

basis

that

ASAM

Criteria

are

not

intended as

a

tool

of

finality for

discemment of

a

level

of care.

130.

After

a

period

of

discussion,

Wellmark's Utilization

Review Manager

eventually

recognized that

Wellmark

was

contractually

obligated to apply

InterQual@

Criteria

and

granted

precertification

for the

requested

level

of

care.

t31.

In

response

hcwever,

and

in ligbt of

the

parties'

previous dispute regarding

medical

necessity determinations,

effective

August 14,2A15,

St.

Gregory staff

members

began

submitting

patient

medical

records to Wellmark

as

a

standard

part

of

its

precertification

process.

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I32.

Thus,

since

August

2015,

Wellmark s

nurses

have

had both the

patient diagnosis

information

provided

over

the

telephone

and the

patient s

medical

records

to

rely on in

making

a

medical

necessity determination.

With this

information,

Wellmark s

Utilization

Management

nurses

continued

to

precertiff

specific

levels

ofcare

prior

to

St.

Gregory

providing

such

services.

133.

Despite

St. Gregory s

continued

use of

the

precertification

process,

and

despite

the

fact that

nothing

had

changed

in St.

Gregory s

provision

of

care,

in

September

20t5,

Wellmark

employees

suddenly

began

using a number

of different

tactics to delay

and

deny

St

Gregory s

claims

for

payment.

I34.

On

information

and

belief,

these

tactics

were

employed

as

a

way to

keep

money

Wellmark admittedly

owed

Plaintifß,

such

that, when

Defendants

later asserted

a

claim

for

recoupment, Wellmark

already

had

Plaintifß

money

in

its

possession.

135.

For instance,

in

or around

September

2015,

Wellmark

employees

began

systematically

denying

or

delaying

the

processing

of

St.

Gregory

and

ALPP s

claims

for

payment

on

the

basis

of

failure

to submit

medical records.

The fraudulent

nature

of

these delays

and

denials

is

highlighted by

the

foliowing

facts:

a.

St.

Gregory

staff

were already sending

all

medical

records

as

part

of

the

precertification

process;

b.

Wellmark s

electronic

claim submission

system

shows

when a

medical

record

has

been

attached

to a claim

submission,

and

in many

instances

Wellmark

continued

to deny

claims on the

basis of

failure to

submit

medical

records

despite

the

fact

thatthe

claim submission

system

(viewable

to both

Wellmark

and

St.

Gregory

staff) showed

the

records

were

attached;

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c.

In response

to

such

denials,

St.

Gregory

staffagain

re-attached

the

patient's

medical

records.

Wellmark

then

responded

in

one of

a

number

of ways,

each

of

which,

as

intended,

further

delayed

or

ended

processing of the

claim.

For

example,

in

some instances,

when

St. Gregory

staff

reattached

the

medical

records,

Wellmark

responded

by denying

the

claims

as duplicative'

In other

instances,

Wellmark

subsequently

denied

the

claim

on

the

ground that

the medical

records

sent

were

unsolicited.

At

yet

other

times,

Wellmark

responded

stating

simply

that

Wellmark

was standing

on

denial.

136.

Attached

hereto

as

Exhibit

E is

atimeline

comparing

the

average

amount

of

time

Wellmark

took

to

process

an average

St. Gregory

or

ALPP

claim

for

payment in

2015

as

opposed

to2016.

137.

On

info¡mation

and

belief,

based

on

their

positions

within

Wellmark

and

their

involvement

in the

present

dispute,

Defendants

Fay

and

Robles

supervised,

managed,

directed,

and/or

with

knowledge

of

its

purpose

in furtherance

of

the

scheme

to defraud

Plaintiffs,

acquiesced

to

the above-described

conduct.

138.

Plaintiffs'

belief

is further

substantiated

by

the fact

that,

over

many

months,

St.

Gregory

staff

mernbers

have continuously

apprised

Defendant

Fay of

the

above-described

issues,

and

Defendant

Fay

has

continuously

misrepresented

that these

claims

processing

issues

would

be

resolved.

139.

For example,

in October

2015,

Wellmark

began

mass

denying

over

$1

million

in

gross

claims

onthe

ground that the diagnosis

coding

was

incorrect.

After

raising

the

issue

regarding

the diagnosis

coding

denials

to

Defendant

Fay

multiple

times,

in an

in-person

meeting

on

February

lB,20l6,Fay

represented

to

St.

Gregory

staff

that

Wellmark

would

immediately

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reprocess these

claims.

Yet, as of

the

date of

this

filing,

St.

Gregory

has

yet

to

receive

payment

for

these

claims

that

Wellmark

has

admitted

to

erroneously

denying.

140.

With

a

process

in

place

to

ensure

future

payments

to

Plaintiffs

were

iimited,

Defendants

Fay

and

Robles,

in

concert

with

other

Wellmark

employees,

went

on

to conduct

a

fraudulent

post-service

medical necessity

review

of

Plaintiffs'

claims.

141.

On or around

October

21, 2A15,

Defendant

Robles

mailed

a letter

to ALPP

stating

that

Wellmark

had

submitted

four

patients'

medical

records

to Managing

Costs,

Managing

Care

('.MCMC ),

a

peet

review

organization

headquartered

in Massachusetts.

Robles

went

on to

explain

that

MCMC's

review indicated

that

the

level

of

care

provided

by

St. Gregory

was

not

supported

by the four

patients'

medical

records.

142. The

letter from

Defendant

Robles

further

stated

that

ALPP had

been

placed

on

medical

records

review.

The

letter

explained:

What this

means

is

that

V/ellmark

is

requiring

that

you

furnish

medical

records

supporting

all

claims

submitted

to Wellmark

before

such

claims

will

be

processed. Claims

will be

denied

pending

Wellmark's

receipt and

review

of the

requested

records,

and

pending

a

determination

as

to whether

the

records

adequately

support

the claims

submitted.

143.

Additionall¡

on

November

10,

2015,

Defendant

Robles

mailed

St.

Gregory

a

letter in

which

she

informed

St.

Gregory

that Wellmark

was conducting

a

post-payment

review

of

claims

for which

Wellmark

had alreadypaid

St.

Gregory and

requested

medical

records

for 36

St. Gregory

patients.

144.

In response

to

a

question

from

St.

Gregory

as to wþ

Wellmark

was

requesting

medical

records

for

claims

it

had

alreadypaid

on

Novem-ber

20,20L5,

Defendant

Fay

mailed

St.

Gregory

a letter

in

which

he stated that

Wellmark

needed

the

records

in

order

to

determine

whether

the

level

of

care

delivered

was medically

necessary

under

the

individual

circumstances

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of each member,

and

whetheï

the

level

of care

that

was

delivered

is

consistent

with the

precertification request

and

the claims

submitted

to'Wellmark.

l4S.

St. Gregory

subsequently

complied

with

the

post-payment

review

request and was

told

that

nothing

further

would be

done

until

MCMC's

review

was

completed.

The

results

of

MCMC's

review

were

not

provided

to

St. Gregory

for

nearly

three

months.

146.

Also

around

this same time,

in or around

October

or

Novemb

er

2015,

Wellmark

uniiaterally

changed

the

drug testing

policy that St.

Gregory

staff

members

had assisted

Wellmark

in

developing

just

one

year prior.

The

changes

drastically

reduced

the

frequency

and

composition

of

drug

testing

þrocessed

and billed

by

RLS)

that

Wellmark

would

reimburse.

147.

Following

this

change

in

policy, Defendants

have

virÊually

stopped

payrng

RLS's

claims

for

payment,

even

though

their

new

policy,

which

drastically

reduced

the amount

of drug

testing Wellmark

would

reimburse,

still

provided

reimbursement

for

certain

drug

testing

that

was

provided by RLS.

148.

On

February

18,2016,

Defendant

Robles

provided

St.

Gregory

a

letter stating

that

MCMC

had reviewed

the claims

for

71St.

Gregory

and

ALPP

patients and determined

that

Wellmark

had overpaid

St. Gregory

5994,702.04.

In addition

to

demanding

St.

Gregory

refund

that

amount

to

Wellmark,

the

letter

stated

that

the

review also

included

some

claims

that

had

not

yet

been

paid

and Wellmark

was

denying

those claims.

1,4g.

That same

day,

Defendant

Fay met

with St.

Gregory

staff

at

Wellmark's

offices.

The meeting was

presented

to

St.

Gregory

staff

as an

opportunity

to discuss

Wellmark's

systematic

claim

denial

and

to

review the

results

of

the

extemal

medical

reçords

review'

150.

At

that

meeting,

Defendant

Fay explained

what

was

written

in

the

letter-that

MCMC's

review

indicated

that the

PHP level

of

care

St.

Gregory

provided was

not

the

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appropriate

level

of

care

for 70 of

71

patients,

and

as

a result,

Wellmark

was

entitled

to

5994,702.A4

in

recoupment

from

St.

Gregory

and ALPP.

151.

As documented

in

the

MCMC

case

reports

provided

to

St,

Gregory

staff

by

Wellmark,

MCMC

conducted

its

primary review

in December

2015

and

January

2016. One

doctor,

Dr.

Stephen

Gilman,

conducted

approximately

85

of

those

rwiews.

152.

With respect

to

virtuaily

every

patient,

the

MCMC

reviewers

found

that

the level

of

care

billed

for

was

actually

provided,

but that

in

all but

one

case,

the

PHP

level

of care

was

not

medicaily

necessary.

hstead,

the

reviewers

concluded,

the

patients

could

have

been treated

at

an

even

lower

level of outpatient

care.

153.

On

information

and

belief,

Defendants

Fay

and

Robles

directed

MCMC

to

engage

in

a

fraudulent,

result-driven

review

of

Plaintiff

s

claims.

This

belief

is

supported

by

a

number

offacts.

I54.

First,

MCMC

found

99

of St.

Gregory's

claims

lacked

medical

necessity,

despite

the fact

that Wellmark's

Utilization

Management

nurses

had

previously

determined

(often

multiple

times through

the concurrent

review

process)

that

medical

necessity

was in

fact

met

for

1A0

of the

claims.

155. Second,

it

is unrealistic

that,

given

the demographic

St.

Gregory

and

ALPP

serve,

the

PHP level

of

care,

an autpatient

level of

care,was

found

to be

medically

necessary

for

only

I

of 71

patients,

156. Third, the

MCMC

reviewers utilized

improper

standards

of

review.

A number

of

the

reviews do

not

even

identifythe

rnedical

criteria

on

which

the

medical

necessity

determination

was based.

The other

reviews

indicate that

the

reviewer

utllíze'óAsAM

Criteria,

rather

than

InterQual@

Criteria.

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L57.

In

addition

to

these

overarching

issues,

the MCMC

case

reports

were

riddled

with

inconsistencies,

misrepresentations,

and material omissions,

including among

other things,

a

failure

to

identify

the records

relied

on

for

the

review,

inaccuracies

in

summarizing patients'

past

medical

history,

and

inconsistencies

as

to

whether

the reviewer

\ryas

concluding

that

the services

provided

were

necessary

or not.

158.

During

the February 18 meeting,

Defendant

Fay

went

on

to explain

that,

based on

the

77

record review,

Wellmark

believed that

all

claims

St.

Gregory

and ALPP

billed

at

the

PHP

level of care

in the

last 18 months

would

not be

supported

bymedical

records.

159.

This

statement dsmonstrates

that

Defendant Fay

and

Wellmark

had adopted

an

intemal

policy

that, regardless

of

a

patient's

condition,

Wellmark will

never

cover

PHP

services.

1ó0.

At

the meeting,

Defendant

Fay

proceeded

to

present

St. Gregory

staff

a

chart

in

which

he had

extrapolated

the amount

Wellmark

allegedly overpaid

for the 70

MCMC-reviewed

claims

(that

determined

medical necessity

was not

met) to the total

PHP

claims

amount

Wellmark

had

paid

St. Gregory

and

ALPP

in the

past

18

months.

Based on

this ext

St. Gregory Retreat Center v. Wellmark Complaint

Documents

Transcript of St. Gregory Retreat Center v. Wellmark Complaint