Anthem sues California hospital over alleged fraud in toxicology program

Health insurance giant Anthem and nine of its state affiliates have filed a lawsuit against Sonoma West Medical Center in Sebastopol, California, alleging its toxicology program is fraudulently billing for tests other labs had been ordered to perform.

According to the Sonoma West Times & News, the medical center’s alleged scheme was the work of a personal injury lawyer from Florida named Aaron Durall. The suit claimed Durall came to the hospital last year with a proposal for a quick and substantial new revenue stream to save it from financial ruin.

“Durall under the guise of a corporate shell, would acquire urine through a network of marketers and physicians from around the country; he would consolidate that urine through a toxicology lab in Florida that he owned; and the hospital would bill insurers for the testing even though other labs had been ordered to perform it,” the suit said. “With that simple but deceptive scheme, the hospital could increase the insurance payments for those services up to 100 fold.”

Anthem first brought up these allegations in a Feb. 9 letter, saying the arrangement has resulted in more than $13.5 million in improper payments to the hospital. Sonoma West rejected the allegations, saying it had done nothing wrong while suspending the receipt of samples from Durall’s Reliance Lab.

The Sonoma West Times & News reported that suspension was lifted in May but will now been reinstated with the suit being filed.

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