Allstate and three affiliated insurers have sued Surgery Partners Inc. (Nasdaq: SGRY), its anesthesia subsidiary and several Florida ambulatory surgery centers (ASCs).
Broadly, Allstate is alleging Surgery Partners and the other named parties participated in a years-long scheme to submit fraudulent bills for medically unnecessary, unlawfully rendered or unperformed services tied to auto insurance claims.
“We strongly disagree with Allstate’s factually inaccurate and legally deficient allegations and intend to defend this matter vigorously,” Michael Austin with McDermott, Will & Schulte, counsel to Surgery Partners, told ASC News via a company spokesperson.
The complaint, filed April 17 in the U.S. District Court for the Middle District of Florida, names Surgery Partners, Anesthesiology Professional Services Inc. (APS), Tampa Pain Relief Center Inc. and seven Florida surgery centers: Lake Worth Surgical Center, The Gables Surgical Center, Jacksonville Beach Surgery Center, Medical Village Surgical Center, Miami Surgical Center, Millenia Surgery Center and Park Place Surgery Center.
Allstate alleges the defendants used the centers, a pain clinic and an anesthesia business to generate multiple bills from a single patient encounter, including physician charges, anesthesia charges and ASC facility fees. The insurers say they paid millions of dollars on claims inflated by false records, improper coding, unnecessary procedures and duplicate charges.
Surgery Partners owns or controls the named entities, according to the complaint.
Additionally, Allstate’s argument is that many of the services in question should not have been performed in an ASC at all. The complaint states the majority of the billed services were routine pain-management injections that could and should have been done in physician offices, but were instead steered into outpatient surgery centers to generate separate facility fees.
“All of the acts and omissions of the defendants, described throughout this Complaint, were undertaken intentionally,” Allstate said in the filing.
Austin’s statement refuted that framing.
“This case reflects a disagreement over complex medical billing and reimbursement issues, not fraud,” his statement continued. “We believe this lawsuit represents a retrospective attempt by Allstate to recharacterize previously resolved matters without regard to the impact on patient care.”
The insurers also allege the use of anesthesia was routinely exaggerated or unnecessary. In one section of the complaint, Allstate claims APS billed for monitored anesthesia care when patients, in fact, received only conscious sedation – if any anesthesia was provided at all. The complaint also alleges APS improperly used higher-acuity physical status modifiers to increase reimbursement.
The lawsuit has several allegations: billing for services not rendered, double billing for the same service, unbundling supplies and ancillary services that should have been included in facility fees, and performing medically unnecessary procedures to increase the size of claims.
Among the many examples cited in the complaint, Allstate alleges Lake Worth Surgical regularly billed for vertebral corpectomies during spinal fusion procedures when the actual work performed amounted to bone shaving or decompression that was already part of the primary surgery and not separately billable.
The complaint also alleges the defendants billed for more spinal levels than were actually treated, used improper CPT codes to bill for fabricated spinal neuroplasties, and charged for supplies that were either not used or were already included in the ASC payment.
Allstate further alleges the defendants routinely double billed for supplies using CPT code 99070, which the complaint says is not separately billable for ASC facility fees.
Collectively, the defendant ASCs billed at least $3.87 million to Allstate for supplies under that code, according to the complaint.
In another example, Allstate alleges the defendants billed more than $1.43 million for cage insertions that were not separate from spinal instrumentation and, therefore, were not separately payable.
The complaint also targets what Allstate describes as aggressive and medically unjustified treatment patterns. It alleges Tampa Pain Relief and the surgery centers billed for injections performed too early in patients’ treatment, repeated invasive procedures despite evidence they had not worked, and combined pain interventions in ways that defeated their own diagnostic purpose.
In several instances, the complaint alleges patients received epidural steroid injections and facet injections – or facet injections and radiofrequency ablations – to the same levels on the same day.
Allstate also claims some defendants billed for experimental and unapproved procedures, including injections involving Wharton’s jelly and other regenerative products, using miscellaneous procedure codes.
“The defendants’ clear goal was to bill for the most expensive treatments that their physician associates could convince patients to undergo in order to drive up the perceived value of insurance claims,” the complaint alleges.
Allstate is seeking treble damages under RICO, attorneys’ fees, costs and a court declaration that previously denied and pending claims submitted by the defendants are not compensable.
The filing also seeks to place the current allegations in a broader context. Allstate points to prior settlements involving Surgery Partners-related entities, including a 2020 resolution tied to allegations of medically unnecessary urine drug testing and an earlier settlement involving improper injection billing.
The complaint says those matters show the defendants were already aware of problems related to aggressive medical and billing practices.
In his statement, Austin similarly pointed to Allstate’s track record of suing health care providers.
“We are also concerned about the broader trend by Allstate of attempting to bring large, aggregated litigation against health care providers, which can create disruption without benefiting patients,” Austin’s statement noted.
In early March, Allstate filed another complaint against a Texas chiropractic network, claiming it inflated auto injury claims by nearly $26 million.
Last year, Allstate sued multiple imaging centers and affiliated physicians in Texas seeking about $5 million linked to another alleged fraud scam.
There are, indeed, several other examples of Allstate pursuing legal action against providers.
The lawsuit adds to a difficult stretch for Surgery Partners, which has already been under pressure from investors.
In March, activist investor Ortelius Advisors called for sweeping changes at the company, criticizing its performance, governance and capital allocation while urging it to divest its surgical hospitals and focus more tightly on its ASC business.
