Hospital lawsuit accuses Santa Clara County of refusing full reimbursement for more than 5,000 patients

San Jose’s Good Samaritan Hospital — owned by for-profit hospital chain HCA Healthcare — is suing Santa Clara County and its health insurance plan over their reimbursements for emergency care for more than 5,000 patients.

Regional Medical Center, which is also named as a plaintiff in the lawsuit, was owned by HCA until the county purchased it three months ago. The county’s acquisition was driven by HCA’s plans to close the hospital’s Level II trauma center — a move that would have left East San Jose residents without nearby access to trauma care.

According to the lawsuit, which was filed on July 17 in Santa Clara County Superior Court, patients covered by the county’s Valley Health Plan routinely visited Good Samaritan Hospital and Regional Medical Center, which are required by law to provide emergency care to anyone regardless of their insurance or ability to pay.

After a Valley Health Plan patient has been treated, the hospital then sends the bill to the insurance company. Normally, if a hospital has a contract with an insurance provider and is “in-network,” insurance pays the agreed-upon rate. If the hospital is “out-of-network,” the insurance provider has to pay a reasonable cost for the services.

But attempts at negotiating a contract between Good Samaritan Hospital and Valley Health Plan have been “wholly unsuccessful,” according to the lawsuit. The two parties have also disagreed over the cost of services for patients insured by Valley Health Plan, with the lawsuit alleging the county-sponsored insurance provider “has paid amounts that are substantially less than the billed amounts.”

Vally Health Plan “repeatedly has refused to pay the reasonable and customary value of the services” for its patients, the lawsuit said. “VHP instead ‘self-determined’ amounts to pay to the hospitals. These amounts are less than reasonable and customary value for the services. VHP has thus put the hospitals in an untenable position — they cannot refuse to provide emergency medical services to VHP patients, but they also cannot accept VHP’s self-determined and insufficient amounts for those services.”

Good Samaritan is seeking to recover the difference between what Valley Health Plan has paid in those cases and what it believes is the “reasonable and customary value of the hospitals’ services,” according to the lawsuit.

A spokesperson for Good Samaritan Hospital declined to answer specific questions about how much the hospital believed it is owed and how the dispute has impacted overall operations.

The lawsuit also accused the county of using a “flawed methodology that does not comply with California laws to determine the amount it pays for such services.”

In a statement, Santa Clara County Counsel Tony LoPresti said the county “uses well-established and widely accepted methodologies for developing reasonable and customary reimbursement rates for medical services, and we look forward to presenting those methodologies to the court in this litigation.”

The lawsuit comes at a time when the county is bracing for impacts to its health care system as a result of President Donald Trump’s “Big, Beautiful Bill,” which will cut Medicaid — a federally funded public health insurance program known as Medi-Cal in California — by $1 trillion over the next decade. Revenues from Medicaid are the largest source of revenue for the county-operated Santa Clara Valley Healthcare system, and the county is expecting $1 billion in lost federal revenues locally over the next few years.

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