South Bay surgery facilities sued for $39 million by second insurer [San Jose Mercury News, Calif.]

June 19--A second insurance giant has sued Saratoga-based Bay Area Surgical Management and its five facilities, claiming that the company submitted inflated and fraudulent bills.

The suit, filed Monday by United Healthcare Services, echoes assertions in a $20 millionAetna Insurance suit filed early this year that the company is making millions of dollars and enriching local doctors by sidestepping state and federal laws meant to protect patients and control costs. United Healthcare's suit seeks restituion of $39 million and unspecified damages.

Bay Area Surgical Management denies the allegations, saying that they are inaccurate -- and represent the two insurers' attempt to force the company to sign a contract with very low reimbursement rates for patient care.

"It's a strong-arm tactic," said Bobby Sarnevesht of Surgical Management. "They think if they come at us, all at once, we'll be bullied into signing an unfavorable contract."

The company, which manages outpatient surgical centers, says it gets paid just a fraction of what insurers pay to surgery centers affiliated with hospitals like Stanford or El Camino in Mountain View.

"Our patients' lives are not less valuable than a Stanford life, an El Camino life or a Sutter life," Sarnevesht said. "We deserve at least half of what these larger providers are getting and instead are offered only 10 to 15 percent. We think it is unreasonable and unfair."

In the suit, filed in Santa

Clara County Superior Court, United claims Bay Area Surgical Management and its five facilities violated California law by:

--Submitting inflated and fraudulent bills.

--Failing to disclose waivers of patient co-pays.

--Creating incentives for doctors to refer patients and paying its doctors kickbacks through above-market rates of return for investment in the facilities.

United claims in one instance that Los Gatos's National Ambulatory Surgical Center billed United $69,700 for a single arthroscopic knee surgery in June 2011 -- more than nine times the average fee of $5,853 billed by United's other Northern California providers.

It claims that, in 2009, Forest Surgery Center in San Jose billed United $32,300 for two spinal injections, compared to $1,535 at centers elsewhere, more than 1,785 percent higher than at the company's approved providers.

Surgical Management's text messages promised doctors a 525 percent return on their investments, United claims. The insurer asserts these were exorbitant returns made possible by fraudulent billing.

United does not explain why it took so long for it to recognize the higher fees. In its suit, Aetna said it didn't notice that it was paying high fees because it relied on a computerized system, which does not review the size of the claim.

Both United and Aetna's suits ask that Surgical Management end its practices.

The surgical company said that its fees are lower than comparable hospital-run surgical centers. And it denies that it waives co-payments. "We collect from hundreds of thousands of patients," Sarnevesht said. "But it is hard to collect money from people who don't have money."

It does not excessively reward the doctors who invest in the facilities, Sarnevesht said.

The co-founders and managers of Bay Area Surgical Management, named in the suit, are Sarnevesht and parents Julia Hashemieh and Javad Zolfaghari.

The outpatient surgery centers named in the suit are:

--Bay Area Surgical Group, Santa Clara

--Forest Surgery Center, San Jose

--Knowles Surgery Center, Los Gatos

--Los Altos Surgery Center, Los Altos

--National Ambulatory Surgery Center, Los Gatos

Contact Lisa M. Krieger at 650-492-4098.

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