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Complaint Against Medical Billing Cos. Alleges Fiduciary Duty Breach, Misrepresentation, Fraud

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On Thursday, in the Central District of California, The Vanguard Clinic , Nova Integrated Health, Gossett Global Health Solutions , and three individuals filed a complaint against the National Billing Institute (NBI), Resonant Specific Technologies (RST), and Kareo , alleging breach of fiduciary duty, intentional and negligent misrepresentation, concealment, constructive fraud, recession, conversion, and unlawful business practices related to Medicare coverage and billing for treatments.

The plaintiffs said they are corporations are clinics focused on chronic pain management, and the individuals, Drs. Michael Glickert, Taylor Vanden Wynboom, and Tommy Gossett, are a managing member of Vanguard Clinic, the president of Nova Integrated, and the president of Gossett Clinic, respectively.

According to the complaint, NBI, a medical insurance billing company, RST, creator and distributor of pain treatment device Sanexas to health care providers, and Kareo, a provider of medical billing services and an electronic medical records (EMR) platform for health care providers and insurance billing companies, had a relationship in which RST sold Sanexas to the plaintiffs and referred them to NBI for billing, which billed Sanexas to Medicare and other insurance plans via Kareo’s billing platform.

RST “represented that Sanexas treatments were considered to be medically necessary for treating, inter alia, peripheral neuropathy and chronic pain, and thus covered by Medicare and other insurance plans,” plus a vitamin-blend injection as part of the treatment, the complaint said. The plaintiff individuals began noticing improper billing codes on insurance claims related to these products — for example, the bills for the vitamin injections were represented as needing separate billing for each ingredient, and the defendants claimed multiple billing codes were appropriate since the Food and Drug Administration had approved Sanexas and the vitamin injection “for multiple treatments.”

According to the plaintiffs, however, “Medicare and other insurance companies require drug mixtures and compounds to be billed using (one code) … rather than billing each ingredient separately” and that Medicare generally does not recognize vitamin injections as “medically reasonable and necessary for diagnosis or treatment of an injury or illness.”

The plaintiffs claimed a breach of fiduciary duty by NBI and Kareo on the grounds that the defendants continued to receive compensation through insurance claims on behalf of the plaintiffs while engaging in improper conduct. 

The alleged intentional and negligent misrepresentations made by NBI and Kareo include that the Sanexas treatments and vitamin injections were “medically necessary,” that the treatments would be covered by Medicare for treatment of peripheral neuropathy and chronic pain, and that the billing coding was correct; the plaintiffs also alleged that NBI and Kareo engaged in concealment of these misrepresentations.

In alleging constructive fraud, the plaintiffs said NBI and Kareo breached their duty because they knew the plaintiffs had trust in them and had a “duty to abstain from taking advantage of” their trust and best interests.

Regarding the aforementioned allegations and the others, the complaint said, “The foregoing acts of NBI and Kareo were oppressive, malicious, and despicable, entitling Plaintiffs to punitive damages.”

The plaintiffs requested compensatory, general, punitive, and special damages, pre- and post-judgment interest, an order to rescind the billing agreements and nondisclosure agreements among the plaintiffs and NBI, reasonable attorney’s fees, and other just and proper relief.

The plaintiffs are represented by Khouri Law Firm APC.

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