A Des Moines-based drug and alcohol treatment facility has filed a federal lawsuit against Wellmark Blue Cross and Blue Shield, accusing the health insurer of multiple counts of fraud and breach of contract.

The suit, filed by St. Gregory Retreat Centers and the Alternative Legal Placement Program, also accuses specific Wellmark employees of engaging in a scheme to delay and deny millions of dollars in valid insurance claims in an apparent effort to induce the companies into accepting lower reimbursements.

The lawsuit claims that Wellmark owes St. Gregory millions of dollars in unpaid claims that the insurer has delayed or denied based on fraudulent grounds.

“Wellmark has demonstrated a consistent, organized and egregious pattern of manufacturing excuses to avoid paying valid claims for reimbursement,” Mike Vasquez, St. Gregory founder and CEO, said in a statement. “Wellmark’s tactics are both illegal and morally repugnant. We provide life-saving treatment to a high-risk population. However, when Wellmark realized our clients carry higher insurance risks, they tried to use fraud and extortion to avoid paying the valid insurance claims they had preauthorized before we even began treatment.”

Traci McBee, a Wellmark spokeswoman, said her company has not received or had an opportunity to review a copy of the lawsuit.

“Wellmark has been involved in a dispute with St. Gregory’s regarding its billing practices,” McBee said in an emailed statement. “We attempted to resolve the matter directly with St. Gregory Retreat Center. Those efforts to date have been unsuccessful. We will be reviewing the lawsuit and will respond appropriately with court filings that state Wellmark’s position on the matter.”

 

Wellmark in February terminated its agreements with St. Gregory and the Alternative Legal Placement Program, effective June 30.

Wellmark had met with officials at St. Gregory’s more than 15 times over a multiyear period to inform them about appropriate billing practices, McBee said.

“In 99 percent of the cases reviewed by an independent medical reviewer, St. Gregory’s requested reimbursement for a level of care that in the determination of the independent medical reviewer, was not supported by St. Gregory’s medical records,” she said.

In October 2013 St. Gregory had reached a settlement with Wellmark regarding a number of claims that Wellmark had argued were not medically necessary. As a condition of the settlement, Wellmark set in place a process to preauthorize specific medical treatments before care was provided.

The lawsuit alleges that following a rate increase by Wellmark in September 2015, Wellmark changed its enrollment policy to preclude many Alternative Legal Placement Program (ALPP) patients from being covered while under a Wellmark insurance plan.

Wellmark had provided services since June 2014 under the ALPP, which provides substance abuse treatment for individuals released from the Polk County Jail or transferred from other correctional facilities.

After terminating its agreements with St. Gregory, Wellmark subsequently conducted a post-service medical necessity review on 98 claims of St. Gregory and ALPP patients.

St. Gregory argues in the lawsuit that all of the claims had been preapproved as medically necessary, sometimes as many as five times during the patient’s stay. Following the review, Wellmark said that only one of those 98 patients actually needed the treatment that was provided.