PHOENIX (CN) - In the wake of the largest Medicaid fraud in state history, the operator of one of Arizona's most popular private insurance plans argued Tuesday that breach of contract claims against it should be arbitrated outside of court.
The owners and operators behind two dozen behavioral health care facilities say they were unfairly targeted in the state's haphazard attempt to shut off the $2.5 billion cash flow off the backs of nearly 7,000 exploited Native Americans in phony sober living homes by revoking more than 100 licenses, seemingly at random, and refusing to pay out claims after services were already rendered.
The providers said in a January lawsuit that Arizona Complete Health (ACH), owned by Centene Corporation, violated contracts between it and the providers when it voided provider participation agreements and revoked their licenses.
In a Phoenix courtroom Tuesday morning, defense attorney Abraham Souza said all contracts between Centene and the health care providers are subject to the arbitration agreement laid out in the provider participation agreements. Subject to the agreements, Souza said all breach of contract claims against Centene and Arizona Complete Care should be arbitrated and settled out of court.
Representing SonderCare Behavioral Health, Joshua Abromovitz told the judge that that matter comes down to "fundamental fairness."
Like the other affected businesses, Arizona Complete Care terminated SonderCare's license in 2023, citing documentation and billing errors following onsite inspections from the Arizona Health Care Cost Containment System, the state's Medicaid program. SonderCare and others were not given the opportunity to dispute the findings.
The providers say Medicaid and Arizona Complete Health targeted small Black and Indigenous owned facilities, allowing larger corporations to continue operating.
"They stack the odds against small providers like SonderCare," the Burg Simpson attorney told Maricopa County Judge Melissa Julian. "They shouldn't be able to shield themselves behind arbitration."
Abromovitz complained that the provider participation agreement "provides free range for ACH to do whatever it wants" without granting the providers similar freedoms.
"Why does Centene get the benefit of adjudicating claims the way they want to when nobody else does?" he asked.
He added that the new business owners typically sign the agreements virtually without advice from legal counsel. Some of them don't speak English, he said.
Fraudulent sober living homes first popped up in Phoenix in January 2019, according to a court filing against the state, luring vulnerable, often homeless or elderly Native Americans into fake services intended to overbill Medicaid by up to $1,000 per patient per day, the Arizona Republic has reported.
By November 2022, people reported missing from tribal communities were regularly found at Phoenix drug and alcohol treatment centers. Victims often didn't understand why they were taken there and couldn't leave until family members intervened. Arizona state Senator Theresa Hatathlie likened the scams to human trafficking.
As of May, the state has indicted more than 100 providers and recouped at least $125 million - still only 5% of the $2.5 billion lost.
"There are hundreds if not thousands of people waiting desperately to find out what happened," Abromovitz said. Bifurcating claims by dismissing some parties would prejudice the plaintiffs at trial and mean less information is revealed upon discovery, he added.
Julian asked whether she's legally allowed to block enforcement of an arbitration agreement. Abromovitz said state law allows a judge to "look at the totality of the circumstances," and find whether arbitration would prejudice parties on remaining claims. Souza said no such exception exists.
Both parties asked that, if Julian enforces arbitration, the rest of the case be stayed while the relevant counts are settled out of court.
Julian said she would make a ruling as soon as possible.
Source: Courthouse News Service
