The practice—known as "balance billing—is becoming increasingly common in California. The Department of Managed Health Care has banned balance billing, but regulations aren't expected to take effect until the fall, at the earliest.
That agency's director, Cindy Ehnes, said Prime Healthcare Services Inc. is "the largest example of this egregious practice we've seen to date, and it must be stopped."
Ehnes' agency filed a lawsuit Friday in Orange County Superior Court against Prime Healthcare. The suit seeks to prohibit the Victorville-based company from billing patients for unpaid medical bills Prime contends insurers owe.
"Consumers who have purchased health coverage in good faith deserve to know that it will cover them in a medical emergency and not result in crushing medical debt," Ehnes told the Los Angeles Times.
Prime acknowledged it has been billing thousands of patients the unpaid portions of their bills. The company contends it can legally do so—and that it wouldn't have to if insurers paid their full portion of medical claims.
Prime has 12 hospitals in Southern California and has acquired all but one of its properties in the past four years.
The Times reported that when Prime takes over a hospital, it often cancels insurance contracts, allowing it to charge higher rates. Insurers contend they had begun sending Prime only partial payments on members' bills. This spring, Kaiser Permanente sued Prime to prohibit the company from billing more than 5,000 of its members for unpaid bills. A temporary injunction prevents Prime from such billing until the case is resolved.
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