Atrium cost Medicare provider $62M by hindering new health plan work, lawsuit claims

This story was updated on July 30, 2024, to reflect a filing in the case by Atrium.

Atrium Health is being sued by an insurance provider over claims of not supporting a Medicare program for patients, according to North Carolina Business Court records.

The healthcare giant is denying the allegations.

ApexHealth and its associated businesses claim that Atrium Health breached a contract to collaborate on a new Medicare Advantage health plan. As a result, ApexHealth lost $62 million setting up the program, according to its attorneys. The case was filed in Mecklenburg County in May.

An agreement was made between the parties in May 2021 and announced to the public that November, according to the court complaint and a news release. Apex is seeking compensation for losses.

ApexHealth did not respond to a request for comment from The Charlotte Observer.

About the case

Medicare Advantage is a health plan offered by a private company that contracts with Medicare, a federal health insurance for anyone age 65 and older, and some people under 65 with certain disabilities or conditions.

In 2021, ApexHealth said that Atrium would anchor its integrated network of providers and hospitals in the Carolinas for the Medicare Advantage plan and its members.

Under the agreement, ApexHealth was to offer its Medicare Advantage health plan within the Carolinas, starting in 2022, according to the suit. Atrium was to serve as the exclusive health care provider for plan members in area where it provides services, subject to the addition of other providers, necessary to meet network requirements.

The suit noted that Apex’s enrollment numbers for the plan was a flop, with less than 200 members because of Atrium’s lack of cooperation and cost it tens of millions of dollars and future earnings.

Atrium “fell woefully short” of fulfilling the duties under the agreement, made its own financial benefits a priority over the contract, failed to provide necessary resources and never made efforts for the contract, ApexHealth claimed in the suit.

“In fact, Atrium was often an active hindrance to the plan’s success, preventing any meaningful marketing of the plan and refusing to perform its duties to assist and support Apex’s marketing efforts,” ApexHealth argued in the complaint. “Atrium’s failures caused the entire plan to fail.”

Atrium’s response

Atrium filed a response to the the case on Monday, July 29.

It said Apex is not entitled to any relief whatsoever and denied that it breached a contract, according to the Atrium response. Along with other defenses, Atrium said Apex’s losses are a result of its “own poor decisions.”

Atrium said Apex understood what assistance the healthcare system would provide under the agreement, but it continued to invest money in the plan without asserting that Atrium fell short of its contractual obligations, the response claimed.

“Apex failed to engage in best practices for marketing and promoting the plan, despite encouragement and assistance from Atrium,” the hospital system said in its response.

The healthcare company also claims that Apex failed to get the plan approved with the Centers for Medicare and Medicaid Services, making it impossible for it to be successful.

About Atrium and ApexHealth

Atrium Health is a part of Charlotte-based Advocate Health. The hospital system is the third-largest nonprofit health system in the U.S. and serves about 6 million patients. More than 155,000 employees work in 68 hospitals and over 1,000 health care locations.

ApexHealth was formed in 2018 to offer Medicare Advantage plan in the Carolinas with plans to expand in bordering states. It’s listed as a North Carolina corporation, but is based in Michigan.

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