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Aetna Life Insurance Co. v. Yi

United States District Court, S.D. Texas

June 4, 2019

Aetna Life Insurance Company, Plaintiff,
v.
Won Yi, et al., Defendants.

          AMENDED OPINION ON JUDGMENT

          Lynn N. Hughes United States District Judge.

         1. Facts.

         In 1998, Paragon Ambulatory Health Resources, LLC, and its related businesses engaged Physicians Auditing &r Billing Services, Inc., for its billing and collections. The Paragon companies supplied mobile anesthesia during minor, in-office gynecological procedures. In 2010, Paragon began to issue franchises.

         Won Yi is a board-certified anesthesiologist. In 2010, he acquired a Paragon franchise. He also owns these Paradigm entities:

Paradigm Ambulatory Medical Services, PA
Paradigm Services, LLC
Paradigm Anesthesia Services, PA
Complete Anesthesia Services, PA
Paradigm Ambulatory Associates, LLC

         Aetna Life Insurance Company issues group insurance policies, including those that fund employer-sponsored health-benefit plans. It also serves as a third-party administrator for self-funded health plans. In either case, the insured receives specified benefits for covered health expenses - as defined by the plan. Aetna processes and pays claims.

         2. Plans.

         Aetna's plans distinguish between medical providers who have a fee agreement with it and those who do not. Those providers who are covered by an agreement are called in-network; the others are obviously out-of-network. Medical billing levels have considerable variability by geography - urban or suburban, nature of the service, and administrative burden. With many services, Aetna agrees to pay bills submitted by those that commit to a fee schedule. Both categories of services must comply with the non-price conditions of the plans. Some of these are that the providers must collect co-pays and deductibles, and charge reasonable fees for necessary services.

         By joining Aetna's network, Aetna can reliably and quickly evaluate and pay claims. This reduces both sides' administrative costs, and it accelerates their cash flows. Further, a patient who gets care from an out-of-network provider is likely to pay more than if he were using a network one. The non-network charge commonly exceeds Aetna's estimate of the reasonable market value for the care supplied.

         Aetna and Yi have not agreed to a fee schedule. None of Yi's affiliates has agreed. They are all out-of-network providers.

         3. Scheme.

         Yi uses a billing model that was developed by two people: (a) Paragon Ambulatory Health Resources's owner, Neal Fisher, and (b) Physicians Auditing's owner, Vicki White.

         Yi established the Paradigms to submit medical bills under a range of tax identification numbers and names. For each patient seen, Yi would present two claims to Aetna: (a) a professional fee to administer the anesthesia and (b) a facility fee. Paradigm would bill Aetna $10, 000 to $15, 000 per procedure, while billing the patients $600. Paragon would collect a royalty and other fees based mostly on a percentage of Yi's collections; Physicians Auditing took eight percent of Yi's collections.

         The law requires that medical services only charge proper, reasonable, and medically necessary fees.[1] They are barred from knowingly (a) presenting a false claim for payment under an insurance policy and (b) charging two different prices for the same ...


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