Horizon Blue Cross Blue Shield of New Jersey is accusing the Bayonne Medical Center of “brazenly submitting inflated and fraudulent claims” in a recently filed lawsuit the lawsuit classifies as “frivolous.”

The Newark, N.J.-based insurer filed a complaint for injunctive and declaratory relief in a New Jersey Superior Court May 13. The suit claims that after BMC terminated its network agreement and left the Horizon network in February, the hospital has been charging exorbitant fees and misrepresenting its fees for services, hence defrauding the insurer.

Horizon alleges in the suit that a “scandal ridden and financially troubled” BMC increased its aggregate per day charge by more than 100%. In 2008, the hospital’s aggregate per day charge was $13,000 and this year, it is $29,000, according to Horizon.

BMC also announced it would not collect any portion of the out-of-network fees owed by Horizon members, thereby overbilling the insurer, it said.

“Bayonne Medical Center is inflating and misrepresenting fees to Horizon Blue Cross Blue Shield of New Jersey,” said Jim Albano, vice president of healthcare services for Horizon, in a statement. “This over-billing will ultimately lead to higher premiums for all.”

The purpose of a health insurance network, Horizon said, is to provide affordable access to quality care for everyone in the insurance pool.

“Bayonne Medical Center’s practices are creating an inaccurate perception that health consumers are saving money,” the insurer said. “However, the end result is increased health care costs for Horizon members.”

‘Frivolous’ suit

The hospital’s attorney, David Sokolow called the suit “meritless, baseless and frivolous.”

“A nearly identical case was recently decided in New Jersey, which dismissed the same claims Horizon makes here,” Sokolow said in a statement sent to IFAwebnews.com. “BMC recently terminated its participation contract with Horizon on account of Horizon’s grossly inadequate payment rates, and Horizon has chosen to act out by filing this trivial lawsuit. We intend to defend Horizon’s case against the Hospital vigorously and we have every confidence that it will be disposed of in short order.”

In February 2008, IJKG Opco, LLC purchased the Bayonne Medical Center as part of a bankruptcy sale, to operate it as a non-profit facility. The suit claims that before leaving its network, BMC began soliciting Horizon subscribers to use BMC’s higher-priced services in the future. As an incentive, BMC agreed to accept as “full payment” the amount reimbursed by Horizon.

“While doing so, BMC dramatically inflated and increased its charges and misrepresented that the charges stated on its claims are what it expects to be paid for its services,” the suit reads. “If not stopped, BMC’s fraudulent practices threaten to erode the economies achieved by network health insurance and sent the cost of health care in New Jersey into an upward spiral.”

Officials with BMC said in a statement that Horizon’s suit is “really against the patients of Bayonne, not Bayonne Medical Center.”

“Horizon’s core attack against BMC concerns Horizon’s desire to not pay the required amount on claims, and instead force BMC to reach deeply into the pockets of hardworking patients, many of whom already are paying expensive premiums to Horizon, and to collect additional co-payments and deductibles from them,” the hospital said. “BMC has a mandate and an obligation to the citizens of Bayonne and surrounding areas to give access to care no matter who their insurance carrier is and to treat every patient presented to its emergency room equally and without bias.”

The hospital counters that “money and profits” are Horizon’s main motives in the suit, as the insurer is in the process of seeking New Jersey regulators’ approval to become a for-profit entity.

“[Horizon] has announced plans to launch an initial public offering, which is likely to mean a big pay day for its executives,” BMC claims, adding that the suit is an attempt “to send BMC back into perilous financial straits, which will only do harm to the residents of Bayonne and others who have come to depend upon BMC for their health care needs.”