BlueCross Prevails in Fraud Case Against Perry Community Hospital

Insurer’s audit team discovered suspicious claims activities beginning in mid-2018

– A panel of arbitrators recently awarded BlueCross BlueShield of Tennessee (BlueCross) $5,009,386 in damages relating to the fraudulent laboratory billing scheme of Perry Community Hospital, its former owners and former president. BlueCross filed a demand for arbitration against Perry Community Hospital in 2019 after the insurer’s audit and investigations team uncovered suspicious claims activity, beginning in mid-2018.

“This is a significant victory for our members who ultimately pay the price for predatory billing practices and fraud,” said Scott Pierce, executive vice president and chief operating officer for BlueCross. “We’re always monitoring provider billing practices to ensure those we serve get the most value out of their health care dollars.”

Perry Community Hospital had served as a partner in the BlueCross provider network since 1996. Several months after the Linden, Tenn., hospital was purchased in 2018, BlueCross began to identify questionable medical claims for laboratory services and initiated an audit.  The audit revealed a dramatic and abnormal increase in the number of laboratory service claims being billed as well as claims for services furnished to individuals who were not patients of the hospital and who did not otherwise have a relationship with the hospital.  Ultimately, BlueCross determined it overpaid Perry Community Hospital by as much as $5,009,386.37 relating to questionable laboratory claims.

BlueCross notified hospital officials of the audit results and provided the hospital an opportunity to appeal the determination or repay the overpayment. When Perry Community Hospital did neither, BlueCross initiated arbitration, as provided under the parties’ contract and subsequently removed Perry Community Hospital from the provider network.

 Following hard-fought litigation between the parties, the arbitration panel ruled that BlueCross proved that it had been defrauded, that over 6,000 claims for laboratory services had been improperly billed to BlueCross, and that BlueCross was entitled to recover the full $5,009,386.37 paid to Perry for the disputed claims.

The arbitration award reaffirms BlueCross’s commitment on behalf of its members and customers throughout the State of Tennessee to prevent fraudulent, wasteful, and abusive billing.  BlueCross encourages anyone who becomes aware of any suspicious or questionable billing involving a Blue Cross Blue Shield contracted health care provider to contact BlueCross through its toll-free Fraud Hotline at 1-888-343-4221, which is available 24 hours a day, 7 days a week.

About BlueCross®

BlueCross BlueShield of Tennessee’s mission is to provide peace of mind through better health. Founded in 1945, the Chattanooga-based company is focused on serving more than 3.3 million members in Tennessee and across the country. BlueCross BlueShield of Tennessee Inc. is an independent licensee of the BlueCross BlueShield Association. For more information, visit the company’s website at


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