Hospitals May Have a Case against Slow-Paying Insurers

Hospitals’ uncompensated care expense doesn’t stem just from charity care and the medical bills that patients don’t pay. Insurers and health care third party administrators (TPA) who didn’t pay the amount they agreed to or in a timely manner also contributed to the $31.2 billion in uncompensated care expense hospitals wrote off in 2006.

But health care providers do have the right to sue TPAs for delayed or unpaid claims, according to the decision in the 2004 federal court case, Baylor University Medical Center vs. Epoch Group LLC. And hospitals are entitled to receive the full cost of care provided, not just the amount negotiated under the network contracts, says Ted Shaw, a partner with Financial Resource Group, Dallas-based health care consulting firm.

Financial Resource has teamed with the law firms Broome Bobo LLC of Irving, Texas and Buford & Ryburn of Dallas to help hospitals and large health care systems collect the money they are owed. Shaw said the three partners offer the services because existing contracts between health care providers and insurers and TPAs mandate the timely payment of claims. Some states also have laws requiring prompt payment.

Broome Bobo attorney Matthew Bobo said few hospital executives know about the 2004 breach of contract ruling by the Northern District of Texas, Dallas Division. “This is a huge opportunity for hospitals to recover money that is rightfully theirs,” Bobo said. “When TPAs do not properly pay these claims within the prescribed time it directly affects hospital cash flow.”

In the partnership, Financial Resource provides data analysis and litigation support, Broome Bobo provides the legal services against the third party administrators, and Buford & Ryan pursues claims against insurers. Hospitals pay no up front costs because the three firms will work with hospitals under separate contracts for a contingency fee.

“If we don’t recover anything we don’t get anything,” Shaw said. He estimates more than 20 percent of insurance and TPA claims are underpaid or paid after the 45 days agreed to.

“We’ve been calling this found money at no cost to you,” Bobo said. “It’s a simple breach of contract lawsuit. There’s nothing complicated about it.”

Bobo said hospitals have up to four years from the time a claim was due payment to recover underpaid or delayed claims.