United against Radiology Partners

Update 10/24/2023: The case went to arbitration this fall, and the panel has initially ruled in favor of RP. United is going to fight this, and there are still outstanding counterclaims from United against RP. From the Radiology Business article: “We do not agree that Singleton will recover an award from UnitedHealthcare,” the Minnetonka, Minnesota, company said.

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The big radiology news of the week? United Healthcare–generally felt to be a font of diabolical greed–is suing Radiology Partners:

In its unscrupulous pursuit of profits Radiology Partners orchestrated a pass-through billing scheme intended to defraud United, its customers, and its members of tens of millions of dollars.

Takes one to know one, as the childhood saying goes. You can read the initial complaint here.

United claims that RP illegally funneled the work of multiple groups across and even outside Texas through its most lucrative contract held by a small group in Houston (so-called ‘pass-through’ billing fraud).

The suit alleges that Singleton, a small group in Houston that RP bought in 2014, had an especially lucrative contract dating back to 1998 for ~6x Medicare rates “to practice at two local hospitals.” According to the story, everything was going just fine, until…

That changed in 2014 when Singleton was effectively acquired by Radiology Partners. Once Singleton was controlled by Radiology Partners, Radiology Partners caused Singleton to breach the Agreement by submitting claims for services performed by providers who were not shareholders, partners, or employees of Singleton (the “Unauthorized Providers”) and who were not performing services at hospitals where Singleton was contracted. Likewise, Radiology Partners caused Singleton to fraudulently bill United for services performed on individuals who were not Singleton’s patients.

Now, groups merge all the time or sell to hospitals to take advantage of stronger contracts, so that’s clearly not an issue in all circumstances. It depends on whether or not RP is truly engaged in true pass-through billing or not:

Pass-through billing occurs when an ordering physician requests a service and bills insurance for it but does not perform the service, nor does anyone under the physician’s direct employ. Insurance companies generally forbid this practice.

Per United, the Singleton contract specifically “prohibited Singleton from assigning its rights and responsibilities under the contract without written consent from United, and required Singleton to notify United of any changes in ownership or control.”

As in, RP wasn’t actually allowed to buy them in order to funnel every Texas claim through that Tax ID.

This was presumably RP’s exact business model.

In 2013, the Singleton agreement had 70 unique providers. By 2022, there were more than 1000 providers billing under the Singleton contract. For more context, according to RP’s recent 10-year anniversary press release, RP employed ~3300 radiologists in 2022. (So…1/3 of RPs nationwide practice was added to this contract? Yikes?)

There are also some nice digs about RadPartners as a company in section “III. RADIOLOGY PARTNERS’ BLIND PURSUIT OF PROFIT” (yes, again, United Healthcare clearly has a pathological sense of irony):

While claiming that medical groups are “Locally Led,” Radiology Partners carries out its operations through a web of subsidiaries and affiliates under the umbrella “RadPartners.”

In some cases, medical groups are organized as professional associations. When Radiology Partners takes over, these professional associations become owned by physicians who are executives at Radiology Partners, thus giving Radiology Partners effective control over the medical group.

Radiology Partners controls various functions of these professional associations, including payor contracting and billing.

In exchange for these services, Radiology Partners siphons off large amounts of revenue from the medical groups. Indeed, on information and belief, the affiliated medical groups no longer retain any profits resulting from the radiology services that they provide, and all profits are instead kept by Radiology Partners.

Ouch. Back to the lawsuit, so how does RP get away with keeping the old contract when there is a new owner?

On October 31, 2014, Singleton filed an Amended and Restated Certificate of Formation that changed Singleton’s ownership and made Anthony Gabriel the only member, officer, or director of Singleton. In addition to becoming the sole member, Gabriel became the sole officer and director of Singleton.

Anthony Gabriel is a co-founder of Radiology Partners and its Chief Operating Officer.

No notice was ever provided to United of any change in Singleton’s ownership.

By appointing Gabriel as the sole member and director of Singleton, Radiology Partners can exercise control over all actions taken by Singleton without formally owning it. Radiology Partners and Singleton structured their relationship to remain two separate entities.

And that, I suspect, is the crux. In the real world that you or I live in, RP owns this practice. But they own it by siphoning off all the profits and by installing one of their own as the sole officer with all operational control. But, Singleton remains Singleton. While it’s not exactly “locally led” if Dr. Gabriel is the sole director, Singleton remains a separate legal entity.

The dicier part of the story is that obviously all of these extra rads clearly don’t really work for or at Singleton. I’m not sure what justification RP uses here if that is specifically stated in the contract. It seems like an eating-your-cake-too situation where RP wants to take advantage of a lucrative contract by not formally owning a local practice but also wants to pretend that nonaffiliated RP practices are somehow all the same. After all, Singleton isn’t the one that bought these other “locally led” groups.

While the Agreement contemplated that providers could be added to the Singleton medical group subject to the other terms of those [sic] Agreement, only providers who were actually working for Singleton—and providing services to Singleton patients—could be added to and have their services billed under that contract.

United has since learned that the vast majority of providers that Singleton, acting in concert with Radiology Partners, added to the Agreement were Unauthorized Providers. They were not employees, shareholders, or partners of Singleton and were not providing services to Singleton’s patients (i.e., at hospitals where Singleton was previously contracted to provide radiology services).

I’m obviously not a lawyer, but it would seem the precise wording in the contract for this claim is basically everything. Twitter is full of eating popcorn gifs at the moment.

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The initial complaint of a lawsuit is by definition a one-sided narrative. And, one assumes, this is the strongest story United can tell. Obviously, this has been going on for years, and it’s completely unclear why this is happening now. My initial reaction was to assume that RP and United were in a heated billing dispute of some kind and this was United playing hardball.

RP, for their part, is indeed arguing just that, saying this is just a cynical maneuver in an ongoing reimbursement fight:

We believe UHC’s complaint represents an obvious attempt to delay or disrupt the conclusion of an underpayment dispute currently in arbitration involving a Texas-based RP-affiliated practice.

The lawsuit as a bullying tactic remains alive and well.

It’s challenging to know who is right and wrong this early in the plot. It doesn’t help that neither company is deserving of anyone’s sympathy. I suspect for most observers it’s like hoping for a rare double knockout: it’s a shame there can only be one loser.

As a layperson who reads the news, I am frankly not convinced the legal system even really works. For another radiology example, I enjoyed the legal briefs from the antitrust lawsuit against the American Board of Radiology, but even though I wasn’t impressed by the ABR’s lawyers or their various arguments, they still managed to get that suit dismissed. Clearly what I think doesn’t matter.

But, I will admit, this looks a little…er, fraudy? Perhaps this should come as no surprise given that the RP brass came from DaVita, itself no stranger to fraud (and which has paid ~$1 billion in settlements so far).

If this is just a 3D Chess negotiation ploy, the real question is: Will it work? And, will this get far enough that discovery leads to interesting revelations? From an outsider‘s perspective, it would seem likely that they will settle this quietly out of court for an undisclosed sum without admitting wrongdoing.

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Other than the making public of a previously private spat between United and RP, what does this mean?

Well, for one, this is just one insurer in one (admittedly large) state. You know everyone is going to be pouring over their books looking for evidence of the same and watching closely to see how this turns out. This could be a big nothingburger or the harbinger of doom.

As for RP, how else does this affect things other than the obvious dollars at risk?

I won’t pretend to know how strong their case is, but again, if you read the complaint, it literally looks bad. As in, the raw optics aren’t great.

Now obviously I don’t have the mind of a large institutional investor. A lot of these PE roll-ups looked suspect to me even in the age of zero percent interest rates, and the history of the industry’s company management is mixed, to say the least. But If you’re running a fund considering buying RP’s distressed corporate debt or someone big enough to consider buying the whole thing, I don’t see why you would with this on the table. Yes, their massive leverage in the form of high-interest floating debt is a bigger problem. Yes, their revenue growth is already constrained by the current reimbursement climate and the tight job market. One insurer asking for millions isn’t necessarily a big deal when you already owe billions, but in the face of all these big-picture headwinds, I don’t think this is going to help their marketing department. RP needs help to deal with its debt, and unless they win very quickly, this lawsuit won’t help.

Lastly, I feel bad for some of the individual radiologists named in the suit. RP Executives aside, I doubt any of them knew how billing was being carried out on their behalf. I even recognize some names that no longer work for RP. Perhaps I am being unfair, but this is just one more strike against going to work for an RP company, especially for new graduates. Who wants to have their name dragged as part of a False Claims Act investigation, whistleblower complaint, or other lawsuit? This doesn’t need to be the future of our profession.