LOS ANGELES (AP) — State lawmakers held a hearing to learn more about allegations that a Southern California-based health care company overbilled for its care and has tried to increase revenues by refusing to transfer patients to hospitals in their insurance network.

The hearing was convened Friday by the Senate and Assembly health committees after criticism was leveled against Prime Healthcare, which owns 14 hospitals in California, Texas and Pennsylvania.

Prime Healthcare has been accused in recent years of possibly submitting fraudulent bills to Medicare and Medi-Cal. State Sen. Ed Hernandez, D-West Covina, chairman of the Senate health committee, said he wanted to know more about what Prime Healthcare is doing.

“I have no problem with hospitals and medical providers making a profit, but not at the expense of taxpayers or consumers,” Hernandez said.

Michael Sarrao, vice president and general counsel at Prime Healthcare, denied any wrongdoing by the Ontario-based company and defended its practices. He said he’s not aware of any federal or state inquires.

“We are being unfairly singled out,” Sarrao told the Los Angeles Times outside the hearing. “We are confident our billing is appropriate. This hearing is clearly about politics.”

The hearing focused on whether Prime Healthcare has violated state rules that require hospitals to transfer out-of-network patients to their preferred medical provider once they were stabilized.

Jonathan Gluck, senior executive and counsel at Heritage Provider Network, cited a 2010 study showing that Prime Healthcare hospitalizes its out-of-network emergency room patients at a far higher rate than other hospitals statewide.

“If a hospital wants to game the system, they can tell their doctors to write ‘not stable for transfer,'” Gluck said at the hearing.

Prime filed a federal lawsuit against Kaiser Permanente and the Service Employees International Union last November, claiming the rival medical group and labor union violated the Sherman Antitrust Act by conspiring to squeeze it from the marketplace.

Kaiser and SEIU have denied the allegations.

Meanwhile, Prime Healthcare announced Thursday that president and CEO Lex Reddy has resigned for unspecified personal reasons. Reddy has served in both slots for the past 11 years and his brother-in-law was named an interim CEO.

(© Copyright 2012 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

Comments (18)
  1. BrettMFarrar says:

    Healthcare is not subject to normal market forces! Anything that you have to buy at any random moment in order not to die is not something to which a rational supply/demand calculus can apply. Check out “Penny Health” articles on how to reduce the cost of insurance.

  2. Wolfman says:

    We don’t want Obama care

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