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Greenwood Leflore Hospital Sues Collection Company, Claims $380,000 in Fraudulent Over-billings

Tuesday, December 8, 2015, 4:00 pm News Flash Archive

The Greenwood Leflore Hospital filed suit in federal district court last Friday against Stanley Beaty and his company Alcon Corporation, alleging that Alcon over-billed the hospital by over $380,000 for debt collection services since 2008.

The complaint filed by the hospital may be viewed here: Hospital Complaint against Alcon Corporation

According to the complaint, Alcon was hired in 2003 to provide collection services to the hospital on delinquent patient accounts. Alcon was fired in September 2015 after the alleged billing discrepancies were discovered.

The contract between Alcon and the hospital provided that GLH would pay Alcon a percentage of money Alcon collected. The hospital claims that Beaty inflated the bottom line amount he reported collected on his invoices to garner an increase in his commission.

In all, GLH alleges that Beaty and Alcon overcharged the hospital $382,776 in commissions since September 2008.

The lawsuit also claims that Alcon Inc has been dissolved by the Secretary of States of both Tennessee and Mississippi, and that it is no longer registered as a debt collection company in Tennessee. GLH also claims that Alcon did not maintain a million dollar insurance policy as required by their contract to provide bond coverage.

GLH claims that it found out about this alleged scheme to defraud the hospital on July 20, 2015, when Eva Hensley, a former employee of Beaty's, contacted the hospital and revealed the details to GLH. She claims, in an affidavit that she provided GLH, that Beaty personally manipulated the invoice totals to perpetrate the alleged fraud. She also claims that when she complained to Mr. Beaty, she was "laid off" from her job of 17 years.

Ms. Hensley's affidavit may be viewed here: Affidavit of Eva Hensley

When GLH contacted Mr. Beaty about the alleged over-billing, he acknowledged that some of it had taken place. However, in emails GLH reproduced in its filings, Beaty claimed that Hensley had been fired recently for "misappropriating company funds," and that an audit of Alcon's bills had shown a $70,000 over-billing since 2013, which he blamed on Ms. Hensley.

However, GLH claims, Beaty never sent the promised check for $70,000. Through July and early August 2015, Beaty and Deborah Lea, revenue cycle director at GLH, communicated about their respective findings, but after August 10, 2015, Lea and GLH claim Beaty stopped communicating and was never heard from again.

Ms. Lea's affidavit may be viewed here: Affidavit of Deborah Lea

Meanwhile, according to Ms. Hensley, Beaty was busy packing up his records and equipment and vacated the Alcon office in Memphis.

According to Hensley's affidavit, Shelby County law enforcement is conducting a criminal investigation into Beaty's business practices, and she assisted them in identifying records when they executed a search warrant on November 18, 2015 on a storage facility where Beaty had stored some of Alcon's records. However, the IBM AS/400 minicomputer, on which GLH collection records and patient account information was stored, was nowhere to be found.

GLH alleges, in its complaint, that Beaty was providing "improper gifts" to the hospital employee who was supposed to be monitoring Alcon's invoices. The hospital claims receipt of these gifts by employees from its vendors were prohibited by hospital personnel policy, but that they began way back in 2008. The complaint alleges that one such gift in 2014 was tickets to the Memphis Grizzlies basketball games valued at $820.

The hospital's complaint does not name the employee.

The hospital has also filed a motion for a restraining order to prevent Beaty from destroying any records or computer data.

GLH contends that it stands to lose hundreds of thousands of dollars in Medicare reimbursement for bad debt write-offs that depend upon its ability to prove that it made efforts to collect the debts. Without the data on the IBM AS/400 computer, GLH claims it cannot comply with Medicare documentation guidelines and will lose the Medicare reimbursements.

The Motion for Injunction filed by GLH may be viewed here: GLH Motion for Injunction and Expedited Hearing

The hospital is represented by Frank Trapp of the Phelp-Dunbar law firm in Jackson.

As of now, Alcon and Beaty have not filed any responses to the lawsuit. But The Taxpayers Channel spoke with Mr. Beaty this afternoon. He told us that the allegations in the lawsuit "are just that, allegations."

Beaty said that he was confident that the dispute could be resolved quickly, and that the actions taken by GLH were "unnecessary." He stated that he would be providing a response to the specific allegations in a week or two, but that those would have to come through his attorneys.

Mr. Beaty promised he would provide The Taxpayers Channel with his response once it becomes available.

For complete coverage of these and other hospital milestones, please go here: Taxpayers Channel coverage of Greenwood Leflore Hospital's downfall.

John Pittman Hey
The Taxpayers Channel

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