In the last month, five lawsuits have emerged with significant implications for the ASC industry, covering critical issues from fraud and reimbursement disputes to rising nuclear verdicts and malpractice settlements.
Here are the five lawsuits:
1. Siouxland Surgery Center, operating as Dunes Surgical Hospital in Dakota Dunes, S.D., alongside ASC giant United Surgical Partners International and USP Siouxland, has agreed to pay approximately $12.76 million to settle allegations of violating the False Claims Act.
The claims stem from actions between 2014 and 2019, when Dunes Surgical Hospital allegedly made substantial financial contributions to a nonprofit associated with a physician group that referred patients to the hospital. Additionally, the settlement addresses claims that the hospital provided another physician group with clinic space, staff, and supplies at little to no cost during the same period.
2. A jury awarded more than $400 million to a New Orleans-based surgical center following a prolonged seven-year legal battle against Blue Cross and Blue Shield of Louisiana. The case centered on St. Charles Surgical Hospital and the Center for Restorative Breast Surgery, which accused BCBS Louisiana of underpaying for thousands of breast reconstruction surgeries.
The jury found BCBS Louisiana liable for fraud, ruling that while the insurer had authorized around 7,800 surgeries between 2015 and 2023, it only paid about 9% of the associated claims. St. Charles Surgical Hospital had ended its contract with BCBS in 2007 due to low reimbursement rates but continued treating BCBS patients for authorized surgeries. The insurer contended that authorization does not guarantee payment, but the $421 million award is among the largest in a state known for significant jury verdicts.
3. In Portland, Ore., a jury awarded over $24.6 million in August to the family of Erric Gilbert, who died during a colonoscopy in 2018. The case highlights the trend of escalating “nuclear verdicts” impacting ASCs. The lawsuit against the Portland Clinic and its medical staff sought $57.7 million, alleging that the ASC failed to provide timely emergency resuscitation when Mr. Gilbert’s vital signs deteriorated. The jury assigned 40% of the responsibility to the clinic's medical team, with the rest attributed to an anesthesiologist who had previously settled out of court.
4. Also in August, an anesthesia provider and its malpractice insurer paid a $4.2 million settlement to the family of Michelle Crisafulli, who passed away after a procedure at RWJBarnabas Health's Gregori Surgery Center. This is another example of the rising mega-verdicts facing ASCs.
Ms. Crisafulli underwent general anesthesia for the removal of an intrauterine device on July 24, 2018. During the operation, her oxygen and blood pressure levels dropped, but anesthesiologist Dr. Peter Scala did not stop the procedure. She died nearly a month later, on August 16, 2018. The settlement amount exceeded insurance coverage, with $2 million paid by MedPro and $2.2 million from Pediatrix.
5. A California Court of Appeal has ruled in favor of an ASC upholding the involuntary buyout of a member's ownership interest after alleged misconduct. The case was centered around West Lake, Calif.-based Specialty Surgical Center of Thousand Oaks, who implemented an operating agreement which included a provision that allowed the removal of members to protect the business from internal threats.
The decision reinforces the ability of ASCs to enforce operating agreements that safeguard against internal risks. This ruling emphasizes the protection provided by California’s business judgment rule, allowing ASCs to maintain governance practices that prioritize the stability of their operations. The outcome sets a precedent for ASCs managing internal disputes and protecting their business interests.