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8/16/2019 St. Gregory Retreat Center v. Wellmark Complaint
1/118
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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Case 4:1-6-cv-00259-JAJ-HCA
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of
53
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.
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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).
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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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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
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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.
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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
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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
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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'
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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.
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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.
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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.
.JU-
8/16/2019 St. Gregory Retreat Center v. Wellmark Complaint
31/118
Case
4:16-cv-00259-JAJ-HCA
Document
1 Filed 051261L6
Page 31 of
53
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