For the second time in less than a month, Santa Clara County and its health insurance plan are facing a lawsuit for allegedly failing to pay out reimbursements to hospitals providing care to their members .
Stanford Health Care, which filed the latest lawsuit in Santa Clara County Superior Court on Aug. 6, contends that the county’s Valley Health Plan still owes them $891,858 for treating 11 patients between Nov. 2, 2023 and May 6, 2024.
Stanford and Valley Health Plan entered into a contract on Sept. 1, 2023, that made the hospital “in-network” for the plan’s members. As a result, Stanford agreed to provide “medically necessary care” to those insured by Valley Health Plan in exchange for the insurance plan paying a negotiated rate for health care services — typically lower than the hospital’s standard rate.
“At or near the time of treatment Stanford Hospital verified that the patients were members of VHP’s health plan,” the lawsuit said. “In several instances VHP also issued an authorization number to Stanford Hospital for the treatment rendered to its members.”
The lawsuit argues that after Stanford stabilized the patients, VHP needed to “assume responsibility for the care of the patient either by having medical personnel contracting with the plan personally take over the care of the patient within a reasonable amount of time after the disagreement, or by having another general acute care hospital under contract with the plan agree to accept the transfer of the patient.” Stanford alleges that VHP didn’t make any effort to transfer patients to another facility after they were stabilized.
The total bill for care for the 11 patients in the lawsuit was $4.3 million. Stanford is asking a judge to order Valley Health Plan to pay the remaining $891,858 balance plus interest.
The county did not immediately respond to a request for comment. and attorneys for Stanford could not be reached for comment.
The lawsuit comes just a few weeks after San Jose’s Good Samaritan Hospital — owned by for-profit hospital chain HCA Healthcare — sued the county and Valley Health Plan over allegedly failing to reimburse them for providing emergency care to more than 5,000 patients.
Regional Medical Center, which the county purchased back in April, was also named as a plaintiff in the lawsuit as it was previously owned by HCA.
In the July 17 lawsuit, the hospital alleged that negotiating a contract for services with Valley Health Plan have been “wholly unsuccessful.” The two parties also disagreed over the cost of services, with the lawsuit alleging the county insurance provider “has paid amounts that are substantially less than the billed amounts.”
The lawsuit also accused the county of using a “flawed methodology that does not comply with California laws to determine the amount it pays for such services.” Santa Clara County Counsel Tony LoPresti previously said in a statement to this news organization that the county “uses well-established and widely accepted methodologies for developing reasonable and customary reimbursement rates for medical services, and we look forward to presenting those methodologies to the court in this litigation.”
The lawsuits follow a particularly tense budget season in Santa Clara County with future fiscal uncertainty fueled by cuts — largely to Medicaid — in President Donald Trump’s “Big, Beautiful Bill.” The county expects $4.4 billion in lost revenue through the 2029-2030 fiscal year because of the cuts. Voters will decide in November whether to approve a five-eighths-of-a-cent sales tax to help the county’s health care and hospital system that heavily relies on revenues from Medicaid.
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