Speaking at a status conference for the formerly county-owned hospital’s federal bankruptcy case, Kenneth Lefoldt — the court-appointed liquidation trustee — said he has seen a draft of the lawsuit against the hospital’s managing officers.
The possibility of the lawsuit was included as part of the bankruptcy settlement in September, but it as yet has not been filed.
“We are looking at some sort of action against some people, possibly regarding the RAC audits that should have been appealed,” Lefoldt said.
In the RAC process, a third party — known as a Recovery Audit Contractor — reviews Medicaid and Medicare claims filed by a hospital to see if they were properly filed or if the treatment billed for was appropriate. If the auditor makes a negative finding, funding from future Medicare and Medicaid payments can be withheld by the federal government to compensate for the previous inappropriate payment.
Prior to the hospital’s bankruptcy settlement, it was disclosed that audits that could have been appealed were not. Appeals of audits are often successful.
Lefoldt said the venue for the lawsuit has not yet been decided.