Sovereign Health Motion Alleges Insurance Giant Influence on Federal Investigation

By a News Reporter-Staff News Editor at Insurance Weekly News -- Sovereign Health has filed a motion with the U.S. District Court of the Central California District to unseal federal search warrants that have remained sealed since agents raided multiple Sovereign Health, a national behavioral health system, locations in June. The company is alleging that the sealed affidavit authorizing the raid contained false and misleading information, and concealed information regarding an ongoing civil lawsuit between Sovereign and insurance giant Health Net, Inc.

In 2016, Health Net - which is under investigation by the U.S. Department of Justice and has been sued by federal and state agencies in the past - imposed a blanket policy of refusing to pay for substance use treatment provided to the patients it insures. Sovereign sued Health Net for $55 million in unpaid claims; other behavioral health firms followed the suit.

Health Net retaliated in 2017 by counter-suing Sovereign and other health care networks, alleging fraud and other illegal activities. On June 13, federal and state agents raided several of Sovereign's California facilities pursuant to search warrants that have remained sealed. The company was served search warrants and grand jury subpoenas during the raid. According to the motion, the wording in those documents and the Health Net countersuit are suspiciously similar, according to Sovereign, indicating collusion between law enforcement agencies and Health Net.

"The similarities in language in the search warrants and subpoenas that were issued and Health Net's litigation filings are no coincidence," said Sovereign lead attorney Joshua M. Robbins of Greenberg Gross LLP. "It is clear that the actions of agents on June 13 were influenced by Health Net, as part of its litigation strategy."

The motion filed yesterday asserts Sovereign's right, under the Fourth Amendment of the U.S. Constitution, to obtain and review the federal agents' affidavit supporting the issuance of the search warrants. The motion also alleges that the sealed documents show that Health Net lobbied federal prosecutors and other law enforcement entities to investigate and raid Sovereign Health, affording the insurance behemoth a legal advantage in its litigation against Sovereign, and intimidating other health care providers who are in litigation with Health Net or are considering lawsuits. Furthermore, if Health Net's alleged history of fraud, and its litigation against Sovereign, is not disclosed in the affidavit, the search warrants and raids may be completely unlawful, according to the company.

The California Department of Health Care Services (DHCS) was also a participant in the June 13 raids. As mentioned in the motion, DHCS has been in litigation with Sovereign Health for denying Sovereign's license applications and a March 2017 incident during which a DHCS agent drew a gun in front of staff and teenaged patients at Sovereign's San Diego facility.

During the raid, DHCS agents and other individuals who told patients they were "with the agents" inflamed patients' suspicions and sowed distrust in Sovereign by repeatedly warning patients that Sovereign would be out of business soon and encouraging patients to seek out alternative care facilities. The agents even handed out business cards and brochures referring patients to competing substance abuse providers while referring mental health patients to non-mental health treatment centers, which is also known as patient brokering.

Robbins continued to state, "It is important for us to access the warrant affidavit, as we strongly believe that it will show that Health Net, a large private insurance company that is itself under federal investigation, has wrongfully used the Department of Justice and FBI to gain advantage in civil lawsuits and to intimidate health care providers."

The motion filed by Sovereign on Tuesday also highlights that the search warrants detail government agencies' suspicions that Sovereign violated federal laws governing federal health care programs such as Medicare and Medicaid. Sovereign, however, only accepts private insurance and does not participate in such federal programs, raising the specter that officials acted on false information in obtaining the search warrants.

"Our organization, our patients and employees have suffered tremendously as a result of this raid," said Dr. Tonmoy Sharma, M.B.B.S., M.S.c., founder and CEO of Sovereign Health. "We strongly believe this raid happened under false pretenses. We will continue to fight back until our name is cleared of any wrongdoing." The CEO added, "Had the government requested any documentation on June 13, we would have gladly handed it over. Instead, we were subjected to aggressive and embarrassing invasions of our company's, patients' and employees' privacy."

Although the agents seized a huge volume of records, there were noteworthy omissions in the investigation. The company's financial records were not requested, although the CFO and his staff were present. A large, locked safe in Dr. Sharma's home was not even opened after the CEO offered the combination code. Instead, agents removed from his home, among other items, photographs taken at a family member's wedding, medical school textbooks and personal medical prescriptions.

Sovereign has previously alleged that the agents employed excessive force and unlawful tactics during the raid. More than 100 armed agents from various federal and state agencies participated in the action, which targeted six of Sovereign's facilities and Dr. Sharma's residence. The law enforcement officials terrorized patients recovering from mental health disorders and substance use issues. Sovereign counselors, medical staff and other employees were ordered, in some cases at gunpoint, to line up and were then physically escorted from their rehabilitative activities. The agents seized a multitude of business and personal documents, computers, cell phones and other devices.

From the start, the agents immediately separated patients from employees, confining staff to conference rooms and lobbies. They forced patients, some of whom suffer from post-traumatic stress disorder and anxiety, to stand outside alongside armed officials. They forcibly searched patients and employees' persons and effects; demanded identifying information such as social security numbers, contact information and insurance information; demanded passwords to devices, whether belonging to Sovereign or patients; and coercively interrogated nearly all staff.

The agents also cut off surveillance camera feeds, summoned and interrogated Sovereign IT workers and network administrators, instructing them to provide passwords to devices and servers. Sovereign's legal team had their offices searched and were not permitted to observe the law enforcement officers' activities. Employees who perform admission intake activities had weapons pointed at them. Agents burst through the door to a room in which a patient and clinician involved in a neurofeedback treatment.

"Behavioral health care providers such as Sovereign should be on notice," CEO Sharma said. "If you push back against the system, if you challenge the big dogs, you'll be a target." He added. "We are all grateful for the law enforcement officials who 'serve and protect,' us, who are there when we need them. This action against our company was a stark departure from those tenets."

Keywords for this news article include: Legal Issues, Sovereign Health.

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