gavelOn February 23, 2015, Aetna filed suit in Texas federal court against Robert A. Behar, M.D. and North Cypress Medical Center (North Cypress), alleging that Dr. Behar, the CEO of North Cypress, offered impermissible ownership stakes in the 139-bed community hospital in exchange for patient referrals and designed an out-of-network business strategy that gave rise to excessive fees charged to Aetna. Now North Cypress has struck back.

On August 11, 2015, North Cypress answered Aetna’s complaint denying the allegations, and in addition, filed an original counter-complaint against Aetna and its officers, Mark T. Bertolini, Jeff D. Emerson, Ed Neugebauer, and Clarence Carlton King, for what North Cypress described as “instigating unlawful and illegal decade-long schemes and ‘Major Initiatives’ against physician-owned, out-of-network facility providers such as North Cypress…”

North Cypress contends Aetna’s schemes were perpetrated in order to “‘bring down,’ ‘destroy’ and bankrupt those entities” so that Aetna could realize greater revenues. Aetna’s alleged schemes purportedly involved Aetna making contingency fees of “25% to 50% of the ‘Savings’ that Aetna artificially creates in the adjudication of out-of-network claims…” North Cypress claims Aetna’s actions come at the expense of employer plan sponsors of self-funded plans and out-of-network providers. In carrying out its schemes, which are alleged to violate both state and federal law, North Cypress contends Aetna collected billions of dollars of net revenue per annum.

In striking back at Aetna, North Cypress asserted a host of claims, including violations of RICO, fraud, malicious tort of economic harm, tortious interference with patient agreements, statutory claims for ERISA breach of fiduciary duties, prohibited transactions between plan and parties-in-interest, statutory claims for co-fiduciary liability under ERISA, and statutory claims for violation of section 1125(a) of the Lanham Act. North Cypress did not specify the amount of damages it seeks to recover by way of its original counter-complaint, but did note that the counter-defendants earned a “good portion” of their approximately $500 billion in net revenues by conspiring against and underpaying or not paying North Cypress and other out-of-network hospitals. North Cypress is seeking, among other things, actual, consequential, compensatory, treble, exemplary, and punitive damages. North Cypress also seeks to have the counter-defendants removed as fiduciaries.
In originally bringing the lawsuit, Aetna had alleged that North Cypress implemented an impermissible out-of-network strategy that generally comprised four elements: (1) illegal kickbacks to physicians disguised as ownership interests in the hospital, (2) inappropriate billing practices including an out-of-network emergency room strategy, (3) waiver of Aetna members’ financial responsibility, and (4) grossly excessive fees. Aetna contended that the illegal strategy caused it to overpay North Cypress as much as $120 million since January 1, 2009, and that North Cypress realized gross revenues that dwarf those of other nearby hospitals with greater inpatient bed capacity and higher patient utilization. Aetna is now faced with defending its own out-of-network practices following North Cypress’ claims.

The case is Aetna Life Insurance Company v. Robert A. Behar, M.D., et al., Civil Action No. 4:15-cv-491, in the U.S. District Court for the Southern District of Texas, Houston Division.