Prime Healthcare Services, a 14-hospital chain based in Southern California, filed a federal lawsuit yesterday claiming an antitrust conspiracy between the Service Employees International Union's health care unit and Kaiser Permanente and the Kaiser health plan.
The lawsuit cites the Sherman Antitrust Act, an 1890 law meant to limit monopolies, and contends that the SEIU and Kaiser “have joined forces to … raise Prime’s cost of doing business, with the ultimate objective of eliminating Prime from the market.”
“Prime Healthcare’s business model, which provides cost-effective and high-quality health care in underserved communities, threatens SEIU and its partner Kaiser Permanente,” Michael Sarrao, vice president and general counsel for Prime, said in a press statement.
The union, in a statement issued yesterday, called the case "frivolous" and an attempt to overshadow concerns about Prime's billing practices.
Kaiser said in a statement that it finds the case "deeply puzzling" and says it appears to be an effort to deflect Kaiser's allegations of fraudulent practices against Prime in a separate lawsuit.
Kaiser hospitals and their health plan, which covers about 6.8 million Californians, offer managed care plans that give patients access to a network of doctors and facilities throughout the state.
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The service employees union collects dues from about 150,000 clerks, food service workers and therapists who work in California hospitals and clinics and in turn bargains for worker wages, hours and working condition benefits.
In the lawsuit filed yesterday, Prime claims Kaiser owes its hospitals more than $100 million in unpaid medical bills for emergency services rendered to Kaiser patients.
In a medical emergency, patients are taken to the nearest hospital. Prime also has filed a separate lawsuit against Kaiser that mirrors yesterday's allegation, saying Kaiser wrongfully withholds payments to Prime.
Kaiser, in turn, has filed its own lawsuit, arguing that Prime traps its patients, giving unneeded tests and procedures to drive up bills. The case is pending.
Prime also accuses Kaiser of motivating the SEIU to “injure Prime, attack Prime’s business practices, its patient care, and its hospitals and employees” and to bring “sham and baseless allegations.”
The case says the two entities “share a common objective, to protect their respective business models from competitive threat presented by Prime in the Market.”
In addition to the claims in the lawsuit, Prime has in various contexts accused the state Department of Public Health; Attorney General Kamala Harris; and Sen. Edward Hernandez, D-West Covina, chairman of the Senate Health Committee, of acting at either Kaiser's or the SEIU’s behest.
Prime has been at the center of controversy over its billing practices, which California Watch has covered in detail. The lawsuit accuses the SEIU of having "enlisted the services" of California Watch "to serve as SEIU's ally and spokesperson." The complaint says California Watch writers have "penned articles raising the same sham and baseless" allegations as the union.
California Watch Editorial Director Mark Katches said the news organization, part of the Center for Investigative Reporting, has operated independently.
"Using available state data, court records and good old-fashioned shoe-leather reporting, we have produced a series of revelatory and groundbreaking stories about Prime Healthcare Services, and we stand behind the work 150 percent," Katches said.
Kaiser spokeswoman Sandra Hernandez-Millett said in a statement that Prime's allegations that the firm drives up costs "clearly flies in the face of the facts."
"Prime is the subject of multiple allegations of wrongfully driving up costs in the hospitals it takes over, and providing inappropriate care," Hernandez-Millet wrote in an e-mail.
In a statement, service employees union spokesman David Tokaji called Prime's suit a tactic to "hide what matters" related to high rates of medical conditions reported by Prime's hospitals. Researchers for the SEIU have issued reports saying the chain reports rates of septicemia, a bloodstream infection that Medicare pays heavily to treat, at rates that are three times higher than the national average. The findings, which California Watch reported, spurred calls by federal lawmakers for billing investigations.
California Watch has reported that Prime billed Medicare for a range of other unusual ailments at higher rates than other hospitals in the state that also treat elderly Medicare patients.
"Rather than file suit against healthcare workers who are blowing the whistle on Prime, the company ought to come clean, repay the public and patients, and fundamentally change its business model," Tokaji said in his statement.
Prime, which is based in Ontario and owned by board Chairman Dr. Prem Reddy, is seeking to buy a New Jersey hospital and is managing a 15th facility over the objections of Harris, the attorney general.