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Humble Surgical Hospital is Excoriated by Judge for Bilking Aetna Out of Millions

Texas facility paid physicians referral fees and submitted inflated claims, says court.

Published: February 10, 2017

SHELL GAME? Referring doctors created "shell entities" to help shield their 30% kickbacks, said the court.

A small Texas hospital, "filthy … from lies and corrupt bargains," according to a U.S. District Judge, has been ordered to return $41.4 million it accepted in payments from insurance giant Aetna between August 2010 and October 2013.

In a blistering decision, Judge Lynn N. Hughes says Humble Surgical Hospital, a 5-bed facility on the outskirts of Houston, "conducted guerilla warfare against this court, Aetna, the patients and common decency."

The out-of-network hospital illegally lured both patients and doctors, wrote the judge, "because no economically rational patient would choose it over an in-network provider." As part of the scheme, "Humble paid referral fees to doctors, waived patient costs, and submitted inflated bills to Aetna." Those bills reportedly included nearly $100,000 for ear-wax removal and as much as $74,000 for bunion removal.

The complicated arrangement involved having doctors create "shell entities" that pretended to assume the hospital's billing responsibilities, said the judge. But ultimately all payments were made to Humble, which kept 65% of what it collected from Aetna, funneled 5% to K&S Consulting, its management company, and kicked back 30% to the physicians.

Humble's various defenses failed miserably, said the judge, including its invocation of the "clean hands doctrine," which essentially asserts that no recovery is warranted if the plaintiff has acted unethically or in bad faith. "Aetna's hands are clean," wrote the judge. "Humble is filthy up to the elbows from lies and corrupt bargains."

Humble not only engaged in an illegal scheme, said the judge, but throughout the case it had been "recalcitrant and obstreperous. Through six sets of lawyers, countless orders, hearings, and conferences, Humble's behavior has ranged from openly defiant to evasive." Further, said the judge, it had "been given the opportunity to reform and [had] not done so. Its answer and counterclaims are struck as a consequence of its malfeasance."

Ultimately, the court gave Aetna 3 choices. It could collect from Humble either:

  • $41.4 million — the amount Aetna paid Humble from August 2010 through October 2013;
  • $20.2 million — the difference between what Aetna paid Humble as an out-of-network provider and what it would have paid Humble as an in-network provider; or
  • $12.4 million — an amount equal to the 30% kickbacks paid by Humble with Aetna's money.

A call to Humble was referred to K&S Consulting, whose line was repeatedly busy Wednesday afternoon.

Jim Burger


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