By L.M. Sixel of the Houston Chronicle and Mark Curriden of The Texas Lawbook
(March 26) – Houston-based Humble Surgical Hospital filed for Chapter 11 bankruptcy protection Friday, three weeks after U.S. District Judge Lynn Hughes entered a multi-million judgment against the specialty, five-bed hospital.
Immediately, lawyers for Aetna, claiming to be the “largest of Humble’s creditors by far” in bankruptcy case, asked Judge Hughes to take over the bankruptcy aspects of the case.
Earlier this month, Aetna Life Insurance Co. was awarded $51.4 million, including nearly $10 million in interest, to recover excessive health care fees the insurer said it paid to the hospital during the past seven years.
It’s hard to operate when you have that kind of judgment against you, said Houston bankruptcy lawyer Edward Rothberg, a partner at the 40-lawyer Houston law firm Hoover Slovacek, which represents Humble Surgical.
Without the judgment, the hospital was solvent, he said.
The hospital will remain open as Humble Surgical works its way through the bankruptcy proceedings, said Rothberg. But the longer term is murky.
“I can’t see them generating that kind of revenue to satisfy the judgment,” said Rothberg. The owners of the hospital may end up having to sell the facility, he said.
In its bankruptcy petition, Humble Surgical estimated its assets between $10 million and $50 million and liabilities between $50 million and $100 million.
“Aetna plans to actively participate in the bankruptcy proceedings to ensure that our customers receive payment,” said Anjie Coplin, director of communications for Aetna.
Lawyers for Andrews Kurth Kenyon, which represents Aetna, filed a petition with Judge Hughes arguing that he, as a federal district court judge, has the most knowledge of Humble and would be best to handle the bankruptcy petition.
“The court has developed considerable expertise in Humble’s billing practices and the Texas and federal health care laws that those practices violate,” Andrews Kurth partners John Bruce Shely and Kendall M. Gray stated in the petition.
“In particular, the court is well-versed in Humble’s finances, Humble’s complicated organizational structure and Humble’s kickback payments,” the lawyers representing Aetna stated in the petition. “It would be extraordinarily inefficient to have the bankruptcy court start from square one.”
Aetna sued Humble Surgical Hospital in 2012, contending that the surgical center in Humble charged the giant health insurance company for procedures up to 10 times more than typical market rates. The hospital is not in Aetna’s managed care network, and Aetna accused the surgical center of attracting its patients by offering special discounts.
Typically, health care patients pay more when they use facilities and providers outside of a health insurance company’s managed care network. The higher costs are designed to encourage patients to use facilities that negotiated lower fees for service in exchange for increased patient volume.
Aetna alleged Humble Surgical charged its patients out-of-pocket fees similar to what in-network facilities would charge, but then the hospital billed Aetna for the procedures as an out-of-network provider.
The “sidebar deals” the surgical center made with patients as an inducement meant the surgical center received a “substantial windfall,” according to Aetna’s 2012 lawsuit.
The full docket in the Humble Surgical bankruptcy case can be found here: www.pacermonitor.com/public/case/20701869/Humble_Surgical_Holdings,_LLC#.
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