The seven-year legal dispute between the operator of Stokes County's community hospital operator and Blue Cross Blue Shield N.C. has entered a new stage with the insurer requesting federal court-ordered sanctions on the for-profit health provider.
In particular, Blue Cross NC also wants the Middle District of N.C. to prevent LifeBrite Hospital Group "from offering any evidence at trial (or in any motion) that challenges (its) interpretation" of key data in proceedings."
LifeBrite sued Blue Cross NC in Stokes Superior Court in April 2018, requesting at least $15.5 million in laboratory reimbursement payments. LifeBrite accuses Blue Cross of breaching the contract that LifeBrite inherited from Pioneer Health Services in January 2017.
Blue Cross' counterclaim, filed in May 2018 in federal court, focuses on accusations of a stunning 25,000% increase in submissions of lab tests, or from 267 to 67,000, at the Danbury hospital from the time LifeBrite acquired it in February 2017 to when the countersuit was filed.
Danbury has 189 residents, while Stokes has about 46,000. The bulk of the tests submitted for reimbursement are for urine drug screenings.
"The LifeBrite parties' misrepresentations and refusals to participate in discovery justify fee-shifting sanctions," Blue Cross NC said in an April 25 motion.
"Blue Cross NC respectfully requests that the court put an end to the LifeBrite parties' cat-and-mouse games and hold them accountable for their abuse of the discovery process."
Blue Cross NC said in its April 25 filing that it has been pursuing details from LifeBrite "that would show where the testing was performed, which provider or entity ordered each test, and how each test was billed."
LifeBrite claims it has provided all pertinent testing details and that Blue Cross NC "has more than everything it needs to know to litigate this case."
Blue Cross NC said during April 2024 court proceedings that "the data as it has been produced by the LifeBrite parties would be entirely unworkable in a trial setting."
LifeBrite's response of May 7 claims Blue Cross NC has "misled federal and state law enforcement, government agencies, Blue Cross Blue Shield affiliates, other insurers, and additional third parties in the healthcare industry that LifeBrite Hospital and LifeBrite Labs engaged in fraud and other bad behavior."
"Simply put: Blue Cross NC chose to defame the LifeBrite parties and engage in deceptive and unfair practices when faced with a commercial threat."
Background
LifeBrite, of Lilburn, Ga., paid $400,000 for the Stokes health-care facilities, including a nursing home, in January 2017. It was LifeBrite's first attempt at being a hospital owner-operator.
The 25-bed hospital was rebranded LifeBrite Community Hospital of Stokes. It has more than 250 employees.
BlueCross says LifeBrite routed tests performed elsewhere through the Danbury hospital to take advantage of higher reimbursements available there. The insurer is claiming fraud and breach of contract in its countersuit.
As part of the dispute, Blue Cross removed LifeBrite from in-network status in August 2018.
Blue Cross said in an August 2018 court filing that LifeBrite's actions represent "a $76 million health-insurance swindle" conducted on a national scale.
The insurer claims LifeBrite "turned a trickle of legitimate monthly billing averaging $37,400 into an $8.5 million per month fraudulent river of gold."
Blue Cross said it paid LifeBrite about $11 million before detecting the alleged scheme and stopping payments.
Since 2018, there have been several motions for summary judgments or case dismissals by both parties.
LifeBrite is facing similar litigation in federal court for the Northern District of Georgia involving Blue Cross units in Florida and Georgia, as well as Elevance Health Inc., UnitedHealth Group and Aetna.
LifeBrite filed a countersuit against the insurers in July 2023 that claims "they made false allegations about LifeBrite to regulators and prosecutors to avoid paying millions of dollars in legitimate claims."
Stokes impact
The Blue Cross NC-LifeBrite legal dispute continues as two potential healthcare developments have emerged involving Stokes.
The main appeal to Stokes is that unlike every other Triad county, it doesn't have a hospital affiliated with Cone Health, Atrium Health Wake Forest Baptist or Novant Health Inc.
Dr. Mary Jo Cagle, Cone Health's outgoing president and chief executive, said in December that parent company's Risant Health's $1 billion commitment will make it more feasible for Cone to expand its operational presence in Alamance, Forsyth, Randolph and Rockingham counties.
Cagle announced March 19 plans to step down on May 31 to address what the system calls "a serious family health matter." Bernie Sherry, who has served as Cone's interim chief operating officer since December, will take over as interim chief executive on June 1.
Cagle stressed that the capital investment pledge does not include acquiring a hospital or opening a new acute-care community hospital that typically is in the $100 million to $150 million range.
Instead, Cagle expects the bulk will go toward replacement and refurbishing of current buildings, and to new equipment.
"I could see us growing into other counties with new growth, but I don't see us acquiring existing hospitals," Cagle said.
Cagle said Cone's Rockingham County growth plan could include spilling over into Stokes County.
"Where should we look in Stokes County?" Cagle asked.
"We're up in that area (through Rockingham), so we're looking at doing assessments to say where is there need? Where does it fit with our mission?"
Meanwhile, Novant has a modest provider and dialysis network in Stokes, mostly in King, while Baptist operates two clinics in the county.
In May 2024, the Stokes Board of Commissioners selected Novant's proposal to buy or lease the Danbury hospital over those from Stokes Medical Management Group and for-profit Tenet Health Partners.
The goal at that time was to have the transaction completed by Aug. 1, 2024,
However, negotiations have bogged down between Novant and LifeBrite, Stokes manager Jeff Sanborn said even though the county and Novant have reached their agreement.
Novant said in a November statement that the system "has served the residents of Stokes County for many years and we're proud to have been entrusted with the future of Stokes Reynolds Memorial Hospital."
"We are working with the county and the current hospital operator to ensure a smooth transition in 2025. We will share more about our plans to expand healthcare offerings across the county in the months ahead."
Novant pledged a $50 million capital investment over five years in Stokes healthcare facilities that would include: revitalizing and modernizing the Danbury campus; expanding the King healthcare campus with the development of a rural emergency hospital or free-standing emergency department and a multi-specialty medical office building; adding primary care access points, including urgent care centers; and recruiting additional primary and specialty care physicians.
Novant could not be reached for an update on its Stokes plans.
US Justice investigation
The Atlanta Journal Constitution reported in June 2020 that 10 individuals, including LifeBrite chief executive Christian Fletcher, have been charged with bilking insurance companies through an elaborate scheme using struggling rural hospitals, including the former Chestatee Regional Hospital in Dahlonega, Ga., to bill for drug testing.
The 10 individuals, according to a U.S. Justice Department indictment, were accused of obtaining urine specimens and other samples for testing through kickbacks paid to recruiters and health care providers, including substance abuse treatment centers.
Some of the tests, the government alleges, were not even medically necessary.
The conspirators then billed insurers through the hospitals for about $1.4 billion for lab tests and were paid about $400 million, the government alleges.
In March 2023, four LifeBrite officials, including Fletcher, were acquitted by a Florida jury.
According to a March 28, 2023, article by the Early County News, the LifeBrite officials were found not guilty of charges involving healthcare fraud, conspiracy and money laundering during a retrial that lasted four weeks.
In the original May 2022 trial, two defendants were ultimately convicted. The jury hung, however, on Fletcher and the three other defendants.
In the May 7 court filing, LifeBrite claims Blue Cross NC "hopes it can persuade this court to endorse the same alleged 'fraud' narrative that the U.S. Government also unsuccessfully pursued against LifeBrite's CEO in a 2023 trial at the conclusion of which he was acquitted of all charges."
[email protected] 336-727-7376 @rcraverWSJ
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