Lawsuit brews between Horizon, hospital

August 7, 2009

Bayonne Hospital Center-Horizon Blue Cross Blue Shield of New Jersey heats up.

Bayonne Hospital Center, a 278-bed, acute-care hospital in Hudson County, has filed a lawsuit in federal court against Horizon Blue Cross Blue Shield of New Jersey, claiming “offensive” practices, including what Bayonne calls a “systematic campaign discouraging patients from seeking emergency care at BHC despite it being the closest and safest option for urgent care for the residents of Bayonne.”

The hospital's action follows a lawsuit filed by Horizon BCBSNJ this past May in Essex County Superior Court alleging the hospital was engaging in fraudulent billing practices, charging exorbitant fees and misrepresenting the fees it is charging for its services. Horizon denies the allegations made by BHC in its lawsuit calling them "ridiculous."

“Bayonne Hospital Center has not refuted the fact that they have increased its aggregate per day charge by over 100%. In 2008, the hospital charged $13,000 a day; in 2009, the charges are $29,000 a day,” says Thomas Rubino, director of public affairs, Horizon BCBSNJ. “Due, in large part, to Bayonne’s increased charges, one employer was facing a premium increase of more than 60%. In addition to gouging our members, the hospital is misrepresenting its actual charges to Horizon.”

Bayonne Hospital Center said the rate is more like $18,000 a day, not $29,000 per diem as Horizon states. Having acquired the hospital out of bankruptcy, Daniel Kane, CEO of Bayonne Hospital Center, said that the major health insurance companies were unwilling to agree to in-network rates that would allow the hospital to meet its commitments to the Department of Health and Senior Services and the City of Bayonne.

“Bayonne, unwilling to renege on its commitments, had no choice but to cancel its contracts with a number of major health insurers and thereby become an ‘out-of-network’ provider with respect to those insurers,” Kane says. “Our rates are a function of the severe under-investment in capital expenditures over the last 10 years which needs to now be funded to remain competitive. It is interesting that Horizon refuses to allow Bayonne Hospital Center to disclose what it was paying the hospital through February 6, 2009.”

The contract between Horizon and Bayonne terminated on February 7, 2009.

Notwithstanding Bayonne’s new status as an out-of-network provider with respect to certain major health insurers, Bayonne continued to have manageable relations with the majority of those companies, according to Kane.

“However, immediately after Bayonne commenced providing emergency medical care to Horizon subscribers on an ‘out-of-network’ basis, Horizon began harassing and coercing patients who are receiving emergency medical treatment at Bayonne to cause these patients, against the medical advice of independent, treating physicians, to either terminate their emergency medical treatment or undergo a life-threatening transfer to one of Horizon's participating providers,” Kane says.

Horizon BCBSNJ called the allegations absurd noting, “Horizon BCBSNJ has not taken any improper actions in dealing with Bayonne or in communicating with our members regarding the hospital. We have an obligation to inform our members that they may face higher out-of-network costs when receiving non-emergency procedures at Bayonne.”

Kane alleges that at the same time, Horizon “unlawfully and arbitrarily denied or reducing coverage to patients for the emergency medical treatment that they have received at Bayonne in direct violation of New Jersey law. Further still, Horizon launched a targeted media campaign against Bayonne, and continuously made materially false and misleading statements regarding Bayonne’s charges and business practices in publications throughout Bayonne’s service area and in direct communications to patients and insurance brokers,” he says.

In June 2009 and running into July, and as of the date of the filing of the Complaint, Bayonne has reported that Horizon has stopped making payments to Bayonne on certain emergency services claims, particularly commercial HMO and PPO plans, totaling $4,109,335 which are now delinquent in regard to New Jersey prompt payments regulations, even though Bayonne continues to service Horizon members.

“Bayonne Hospital Center’s billing practices forced Horizon BCBSNJ to file a lawsuit alleging fraud to protect our members,” says Rubino. “We have been accurate in all our communications to our members.”

Bayonne Hospital Center took issue with Rubino’s statement, noting that there have been ”numerous inaccurate and misleading communications by Horizon with its customers in this context.”

“Against this backdrop, and faced with an unprecedented onslaught against its patients and its delivery of emergency medical care, Bayonne filed this case to compel Horizon to stop interfering with the delivery of emergency medical care at Bayonne,” Kane says.

Bayonne believes that New Jersey law is designed to support the efficient and effective delivery of emergency care services to patients regardless of their ability to pay. “A very large part of this statutory equation is maintaining well-staffed, well-equipped emergency departments in New Jersey community hospitals,” Kane says. “Indeed, in cities like Bayonne, with a disproportionately poor and Non-English speaking population, the hospital’s emergency department is critical to the lives and well-being of the community.”

In the past decade, 21 New Jersey community hospitals have closed and six have filed for bankruptcy, according to the New Jersey Hospital Assn. “With respect to the majority of the foregoing closures, and for all of the bankruptcies, inadequate payment for healthcare services to community hospitals has been the major contributing factor to the facility’s demise,” Kane says. “More than half of New Jersey hospitals are operating in the red.”

“The root cause of this dispute is money, and financial mismanagement over the past 10 years as the hospital admits,” Rubino says. “Bayonne wants to increase its revenues on the backs of Horizon BCBSNJ members.”