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Ruling Favors Surgery Centers in Reimbursement Fight With Arkansas Blue Cross

2 min read

More: A deeper look at what led to the lawsuit is available here

A Pulaski County Circuit Court judge Thursday ruled mostly in favor of two Little Rock surgery centers that are battling the state’s largest health insurance company over possibly millions of dollars in reimbursements for procedures done during the COVID-19 pandemic.

Pulaski County Circuit Court Judge Tim Fox affirmed an order from the Arkansas Insurance Department that said Arkansas Blue Cross & Blue Shield of Little Rock was required to offer a hospital contract to the medical centers — Freeway Surgery Center LLC and Centerview Surgery Center LLC. Freeway Surgery Center is known as Legacy Surgery Center.

The surgery centers became temporary hospitals during the public health emergency and said in court filings that they should have been reimbursed for procedures as hospitals instead of at the lower rate for ambulatory surgical centers. 

Fox ruled that the centers were entitled to a hospital contract but only after July 28, 2021, the date that Arkansas Temporary Hospital Facility Act of 2021 went into effect.  

But the centers had asked that the contract be backdated to when they became temporary hospitals in 2020. 

The surgery centers filed a complaint in September 2021 with the Arkansas Insurance Department accusing ABCBS of violating the Arkansas Temporary Hospital Facility Act, which required ABCBS to offer a hospital contract to a temporary hospital, such as the surgery centers. 

ABCBS denied that it was violating the act.

The centers argued that the act required the contracts to be backdated to when they became hospitals. 

The Insurance Department’s hearing officer, Gary Arnold, found that the Temporary Hospital Facility Act required ABCBS to offer a hospital contract to a temporary hospital facility and the act was retroactive to 2020. 

But Fox reversed the retroactive section of the order. 

The legal argument was split into two phases. The first phase involved the legal questions, and the second phase will deal with damages. The surgery centers didn’t list how much money they’re owed in their filings, but it’s expected by people familiar with the case to be in the millions.

But before phase two begins Fox ordered that both sides complete a mediation no later than the end of business on Feb. 16. “All persons having settlement authority shall be physically present for such mediation,” he wrote in the five-page order. 

Joseph Falasco of Quattlebaum Grooms & Tull represented ABCBS and HMO Partners Inc., the joint venture between Baptist Health and ABCBS that does business as Health Advantage, which was also named in the complaint at the AID. 

Attorney Baxter Drennon of Hall Booth Smith’s Little Rock office represented the surgery centers. 

 

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