FLORENCE, S.C. – A hospital in Florence is at the center of lawsuits filed in two federal district courts.
The Medical University Hospital Authority, the board tasked with governing The Medical University of South Carolina, filed suit on May 18 against Community Health Systems in the federal district court of South Carolina alleging that the company breached its obligation to repay MediCARE for overpayments found in an audit.
Community Health Systems filed suit against the authority Jan. 21 alleging that the authority violated the terms of the asset purchase agreement by failing to pay the full purchase price of the agreement, by withholding a MediCAID settlement payment owed to Community Health Systems in the amount of $324,440, by failing to pay all amounts owed under the information technology transition services agreement and by failing to pay all amounts owed under the transition services agreement.
Community Health Systems was the owner of four South Carolina hospitals, including hospitals in Florence and Mullins. It sold to the Medical University of South Carolina in 2018 for a purchase price of $154 million. The company owns 97 hospitals in 17 states and is headquartered in Franklin, Tenn., a southern suburb of Nashville.
The complaint filed by the authority alleges that the company is responsible under the terms of the asset purchase agreement for repaying MediCARE over payments from 2016 and 2017 that were found from an audit of the Florence hospital conducted by the office of the Inspector General.
The audit reviewed 100 MediCARE claims filed by the hospital. Of those claims, 55 were compliant with the MediCARE billing requirements and 45 were not. It alleges that of those 45 claims, 22 were inpatient claims that did not meet coverage requirements, 15 were inpatient claims that should have been billed as either outpatient or outpatient with observation claims, four were inpatient claim and one was an outpatient claim that were incorrectly coded, and three were outpatient claims that were subject to consolidated billing requirements. The audit alleges that the hospital was overpaid by $431,757 for those 100 claims. Of that amount, $367,042 in over payments were made related to the 22 inpatient claims, $52,576 related to the 15 inpatient/outpatient claims, $11,813 from the incorrect billing codes for inpatients, $176 for the consolidated billing errors and $150 for the incorrect outpatient coding.
By extrapolation, the amount owed by the hospital to MediCARE is estimated to be at least $3.4 million for the period of the audit.
Community Health Systems has not yet filed an answer regarding the allegations of MUSC in the complaint.
However, the company did file an appeal of the audit findings, according to the complaint. The complaint notes that the appeal is pending.
A letter mailed by the company to the Office of the Inspector General does not dispute the eight claims related to the incorrect coding and the consolidated billing requirements but denies the findings related to the 22 inpatient claims and the 15 inpatient claims that allegedly should have been billed as outpatient claims. The company also disputes the use of extrapolation to determine the total amount owed to MediCARE in the letter.
The complaint filed by Community Health Systems against the Medical University Hospital Authority in the chancery court of Williamson County, Tennessee – Franklin is the county seat – also alleges that the full purchase price was affected by a higher-than-expected amount of net working capital. The higher amount was around $2.19 million, according to the complaint. There is no specific amount of money listed under the allegations of breach of contract related to the information technology transition service agreement or the transition service agreement.
That case was later removed to the federal district court for Middle Tennessee.
Tennessee is one of several states that are divided into multiple federal court districts. It is divided into three districts: western, middle and eastern.
Often, a lawyer will file in state court and rely on the defendant to move the case to federal court, as the party asking for removal must pay the higher federal case filing fees.
The Medical University Hospital Authority denied allegations of breaching any of the agreements in an answer filed on March 31.
In the answer, the authority argues that the amount it owes should be offset by amounts owed to it by Community Health and also counter-claims breach of contract against a Community Health subsidiary responsible for the transition.