Company's billing system destroyed, suit claims

Kelly Holleran Dec. 11, 2008, 2:16am

A Missouri chiropractic and health services company has filed suit against a Madison County woman and an Orange County, Calif., woman, alleging the women caused the company to lose patients and money after they allegedly destroyed the company's billing system.

Chapel, McMurtrie and Bartlett Chiropractic Orthopedics and Sports Medicine claims it entered into an agreement with Amy Pashea, the Madison County woman, in December 2006 in which she promised to provide billing services to the company, according to the complaint filed Dec. 8 in Madison County Circuit Court.

As part of the billing services, Pashea promised to provide comprehensive billing services, a more efficient and timely collection of the company's revenue, that all the company's significant billing needs would be solved by the services and that the billing services, including the issuance of patient statements and invoices, would be performed in a professional and timely manner, the suit states.

In addition, Pashea said her services would include automated billing, collections and reimbursement solutions for the company, accurate coding, collection and allocation of insurance and other payments, company access to "Kareo" billing software and related databases to allow better management of billing and accounts receivable, her availability to patients and to resolve patient billing questions in a timely manner, adequate training of the company's staff on the Kareo software, a trouble-free and efficient transfer of the company's data to the Kareo databases, comprehensive billing solutions collecting all of the company's revenue with little effort on the company's part and a "go live" date of Jan. 5 , 2007, alleges Chapel, McMurtrie and Bartlett Chiropractic Orthopedics and Sports Medicine.

In return for her services and under the terms of the agreement, Pashea was to be paid 7 percent of all the amounts she collected, according to the complaint.

However, Pashea never told Chapel, McMurtrie and Bartlett Chiropractic Orthopedics and Sports Medicine her business had dissolved on May 31, 2005, according to the complaint.

Pashea and Shadi Hojati, the Orange County woman, did business with Chaple, McMurtrie and Bartlett Chiropractic Orthopedics and Sports Medicine even though neither was registered to do business in the state of Missouri, the suit states.

Pashea began working for the company on Jan. 1, 2007, and submitted an invoice at the end of March for about $9,600, claims Chapel, McMurtrie and Bartlett Chiropractic Orthopedics and Sports Medicine.

After the company received the invoice and the services Pashea said she provided, it disputed both, according to the complaint.

The company claims it brought repeated complaints, such as inaccurate and inconsistent patient personal and insurance information and inaccurate statement amounts, to Pashea's attention from January through June 2007.

Pashea also failed to mail patient statements or invoices from Jan. 1, 2007, through June 1, 2007, which resulted in a substantial loss of cash to the company, according to the complaint.

In addition, the "go live" date, which was when all the software was supposed to be working, was postponed by 17 days to Jan. 22, 2007, the suit states.

Another mistake Pashea made was that she set up Chapel, McMurtrie and Bartlett Chiropractic Orthopedics and Sports Medicine's billing services to receive Medicare assignment even though the company did not request the switch because it had a policy of not accepting Medicare, it claims.

Pashea went so far as to submit a service code for the company's chiropractic services that was not within the chiropractic scope of practice, according to the complaint.

Because of Pashea's errors, Medicare reimbursement checks were sent to the company instead of directly to the company's patients, which resulted in a delay of payments to both the company and its clients, the suit states.

Also because of Pashea's error, a principal of Chapel, McMurtrie and Bartlett Chiropractic Orthopedics and Sports Medicine, Dr. Chapel, received a notice from
Medicare that he was being investigated for Medicare fraud, the company claims.

It requested Pashea fix her many mistakes, but Pashea failed to do so, the suit states.

Although Pashea promised the company it would receive regular reports including account balances and allocation of billables, revenue and profit per chiropractor, it never received one, according to the complaint.

"Such reports were critical to the functioning of the Plaintiff company and were relied upon by Plaintiff to manage its practice," the suit states.

Because of the absence of reports, the company's principals did not know its cash flow, accounts receivables or how much to distribute to shareholders, claims Chapel, McMurtrie and Bartlett Chiropractic Orthopedics and Sports Medicine.

Pashea initially told the company she was processing claims electronically, but later admitted to using U.S. mail, a much slower process.

She also incorrectly billed many of Dr. Bartlett's United Health Care claims as out of network.

In turn, Bartlett lost patients who were upset and who believed she had misguided them into believing she was an in network provider, which she was.

But, because of Pashea's errors, they were charged more than what they should have been, according to the complaint.

"Defendant Pashea's error decreased Dr. Bartlett's patient retention and also decreased her payments from $44 per patient visit to $5 per patient visit for the effected patients," the suit states.

Pashea did not adequately train the company's employees on use of Kareo, the billing system, it claims.

The company had extremely limited access to the system and it prevented the company from making needed corrections, according to the complaint.

Pashea's excuse for her many mistakes was her contraction of cancer, the company claims.

Chapel, McMurtrie and Bartlett Chiropractic Orthopedics and Sports Medicine agreed at a May meeting at its offices in St. Louis County that Hojati would take over for Pashea.

Hojati agreed to resolve the company's billing problems and to be paid seven percent of the bills she collected, according to the complaint.

However, instead of charging seven percent on all claims she collected, Hojati charged seven percent of all collections, including those that the company collected, according to the suit.

"Defendants Hojati and Straight Line, INC. did not have the skill and experience to expertly manage Plaintiff's billing needs and to keep her promises to Plaintiff," the suit states.

Because of Hojati's and Pashea's errors, omissions and unkept promises, the company claims it lost substantial billings, revenue, clients, opportunity, good will, profits, business opportunities, payroll expenses for employees dedicated to fix the problems Pashea and Hojati caused, and incurred significant additional costs, expenses and risk to its business.

The company also faced increased management costs, increased software, hardware and mailing expenses and the expense of associated with obtaining a line of credit to restore the loss of cash flow, according to the complaint.

Hojati and Pashea breached their contract because they failed to provide the billing services promised, according to the complaint.

The two women supplied false information to the company in regards to their failure to exercise reasonable competence in determining the accuracy of its representations and disclosures, the suit states.

Hojati and Pashea breached a good faith and fair dealing promise by making repeated promises exceeding their abilities to perform, by overstating their experience and expertise with Kareo software, by failing or refusing to provide the promised software access, reports, etc. for the agreed-upon price and by failing or refusing to correct errors, the company claims.

The women engaged in deceptive trade practices by passing off billing services as those of another person, causing likelihood of confusion or misunderstanding as to affiliation, connection or association of one defendant to another through statement representation, represented that they were incorporated when they were not, represented their billing services were of a standard higher than they actually were, represented the Kareo software would be adequately accessible to the company for a certain price when it was not, falsely represented the Kareo software bug was to blame for errors after the bug was corrected, represented the billing submissions were made electronically when they were not and represented that they billing services capabilities and resources they did not, according to the complaint.

In the five-count suit, the company is seeking a judgment in excess of $250,000, plus other relief the court deems just.

It is represented by S. Martin Jansky of The Martin Jansky Law Firm in St. Louis.

Madison County Circuit Court case number: 08-L-1152.

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State of Missouri
Missouri, United States
Jefferson City, MO 65101

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