After repeated attempts to bring health care billing practices under fire, one lone crusader has finally got the ball rolling...
Laurel Nokomis
New York City, NY
Women's Health Issues
12/31/07
Hospital cost crusader's case going to trial Judge denies motion to dismiss suit
Four times, retiree Roy J. Meidinger has sued hospitals claiming a long-standing billing system amounts to fraud because of the way the hospitals give secret "charge-offs" to insurance companies in exchange for delivering patients.
Four times, Meidinger's cases have been dismissed by judges.
But the fifth time may prove the charm.
For the first time, a judge has denied a motion to dismiss Meidinger's fifth lawsuit aiming to reform the billing system. Judge John Steele of the U.S. Middle District Court in Fort Myers ruled on the motion, from Lee Memorial Health Systems, earlier this month.
"This is the first time that the judge has finally ruled that we are going to trial," Meidinger said.
Even Meidinger, who has devoted much of the past decade to his battle to change the way hospitals charge all patients the same price but then give hefty discounts to insurance companies, considers his own case a long shot.
He pointed out he's not an attorney. Meidinger is a retired AT&T-trained systems analyst.
"First I went to shock and disbelief," said Meidinger, when asked for his reaction to the judge's ruling. "It's been such a long battle. I became basically numb. Now I'm coming out of it and basically getting prepared (for trial)."
Meidinger pointed out the judge's ruling merely indicates that his allegations, if proved, would represent a legal claim for damages. Meidinger will have a chance to present the proof at trial.
"A judge, who rules on the law, says that I am basically citing the law correctly. Now we have to go to court and I have to present the facts showing the defendant was violating the law," he said.
Meidinger's latest suit claims Lee Memorial Hospital evaded taxes by writing off $873 million in "contractual allowances" to insurance companies over the past seven years.
The write-offs are actually "kickbacks" to insurance companies that have secret contracts with hospitals to deliver their beneficiaries to the hospital, according to the suit.
As a consequence of the system, hospitals nationwide have been jacking up their prices -- without objection from insurance companies, because they don't pay those prices.
As a result, the cost of health care in the United States is so high, it's forcing businesses to move overseas and families to go bankrupt, Meidinger says.
Meidinger claims the "kickbacks" are not lawful because the system amounts to "brokering patients." Therefore, the discounts are not tax-deductible, according to his suit.
Instead, the hospitals should have accounted for the "kickbacks" as "forgiveness of debt," according to Meidinger.
The suit also claims that the hospital failed to submit the proper tax information to the IRS, so the government was unable to collect taxes on the kickbacks to insurance companies, the suit claims.
Attempts to contact Jack Klingensmith, attorney for Lee Memorial, were unsuccessful.
Klingensmith, in a November interview, said he had no doubt that Meidinger's suit would be dismissed. Klingensmith had pointed out judges had dismissed Meidinger's four other claims "with prejudice," which meant he couldn't lodge the same claims again.
But Meidinger, in a 20-page defense to the hospital's motion, pointed out his past cases were based on other legal theories and facts. He had claimed the billing system defrauded Medicare by giving "secret discounts."
His latest suit cites IRS as the victim, and the write-offs aren't discounts, they're "kickbacks," according to Meidinger.
Hospitals typically use the "accrual basis" of accounting. Under that system, as soon as the hospital issues a bill for medical services rendered, that amount is counted as revenue.
Hospitals began citing "contractual allowances" on their tax returns to account for mandatory discounts to Medicare and Medicaid in the early 1980s.
But the private insurance companies then began negotiating for similar discounts, and the hospitals began accounting for them in the same way.
Meidinger a year ago submitted his case under seal to the IRS with a request for an investigation. At that time, Meidinger was claiming that 2,786 hospitals nationwide were giving the kickbacks to insurance companies.
The IRS rejected the request, but issued a directive to its auditors to examine the actual contracts between hospitals and insurance companies. They were to determine if they are legally unenforceable, according to the directive.
Meidinger now predicts that within a year, hospitals will begin to reform their billing system.
"You will see the amount charged to the uninsured lowered to the amount paid by the insurance companies, which is required by the federal and state price discrimination laws," Meidinger wrote, in a recent letter to another health care cost reform organization. "In the future the hospitals will collect the amounts billed to all the private-pay patients."
By GREG MARTIN
Staff Writer
http://www.sun-herald.com/Newsheadline.cfm?headline=9553
I will pray that Mr. Meidinger's case goes well. It's about time someone with guts takes on the Hospital Billing System, as we all know that they are just under low life mobsters. I too have been taken to the cleaners. Americans should be together on this or we will see our children and grandchildren become victims as well.
Posted by: Christine Feragola | 23 January 2008 at 06:26