A lawsuit brought by Greenwood Leflore Hospital has been dismissed, at least momentarily, in federal court due to the defendant’s pending bankruptcy.
Stanley M. Beaty, the defendant, is accused of falsely overbilling patients at the hospital to the tune of nearly $400,000 between August 2008 and June 2015.
The hospital attempted to recoup that money from Beaty and his debt collection company, Alcon Inc., but the company packed up and vacated its Memphis location before making any promised payments to the hospital and before it turned over documentation of overbilling from its computer system to GLH.
The lead attorney for the hospital, Frank Trapp of Jackson firm Phelps Dunbar, is out of the country and was not available for comment today.
According to court records, Alcon Inc.’s alleged scam was discovered by an employee, Eva Hansley, in 2015. Hansley reported the systematic inflation of patient invoices to the hospital’s revenue cycle director, Deborah Lea, and Lea began an internal investigation of the claims.
It appeared by Hansley’s calculations that Alcon typically added 10 percent over the actual charges to its collection invoices and was paid its collection fee from the hospital based on those inflated figures.
Hansley was reportedly terminated from her job after confronting Beaty about his alleged misconduct.
In a signed affidavit, Lea said that when she confronted Beaty, he acknowledged $70,000 in over-billing, which he blamed on Hansley, saying that was why he fired her.
Beaty later corresponded with the hospital in July and August of 2015, promising reimbursement including interest for all overbillings and promised invoice reports to the hospital.
Beaty cut off all communications with the hospital and vacated his Memphis office in August 2015. The hospital formally terminated its contract that September and filed a civil suit in U.S. District Court on Dec. 4, 2015.
Following a string of motions requesting discovery from Alcon/Beaty, the case ground to a halt in March this year when Beaty filed for bankruptcy.
Claims made against Beaty, who operated under a number of John Does, included intermingling corporate funds with private accounts to pay expenses, initiating and directing a scheme to defraud the hospital and others in order to enrich himself, failure to make annual filings required by the state of Tennessee, and the lack of a proper license to operate a debt collection service.
Beaty was also accused of bribing the hospital employee in charge of reviewing Alcon invoices by offering gifts such as $820 worth of tickets to Memphis Grizzlies basketball games.
In the initial filing, Greenwood Leflore Hospital said it would not be able to claim substantial Medicare reimbursement on some uncollectable debts without the documents they sought from Alcon Inc.’s computer.
The Commonwealth reported in December 2015 that Alcon was dissolved by the Mississippi Secretary of State in 2007 and the Tennessee Secretary of State in 2011. In the initial complaint, attorneys for the plaintiff thereby requested that Alcon be treated as an “alter ego” of Beaty and that he be held personally liable for the corporation’s actions.
At that time, according to The Taxpayers Channel, Beaty said that the hospital’s actions were “unnecessary” and that he would respond to allegations over “the next few weeks.”
That response came in the form of court proceedings by Memphis attorneys John Houseal Jr. and Ross Webster, responding to the hospital’s civil suit.
The order to dismiss due to Beaty’s pending bankruptcy was signed by U.S. District Judge Sharion Aycock on March 27.
The case was dismissed without prejudice, meaning the court retains jurisdiction to reopen the action “upon motions of either party advising that the bankruptcy proceedings have been closed and that further litigation to this Court is necessary.”
• Contact Kathryn Eastburn at 581-7235 or keastburn@gwcommonwealth.com.
Lawsuit dismissal order
