Vindicated

When Rockdale’s hospital shut its doors on Dec. 5, 2018—along with its other facilities in Milam County—a fair number of people blamed Little River Healthcare for, well, something.

It was difficult to know exactly what. Health care finances, especially with respect to rural hospitals, are only slightly less complex than thermonuclear physics.

But stories began to appear in purported medical news publications tracing the problems which eventually shut down Little River to its practice of utilizing “third-party laboratories,” most making it appear LRHC was somewhere between incompetent and negligent in its business practices.

Turns out nothing could be further from the truth.

And that’s not just our opinion. It’s also former Texas Supreme Court Justice Harriet O’Neill’s. She was sole arbitrator in a legal case which finally worked its way to a final award this month.

You can read the details in a story on Page 1A but here’s the crux of Justice’s O’Neill’s opinion.

Hospitals often use third-party laboratories. Instead of honoring the terms of its contract with LRHC, Blue Cross/Blue Shield terminated the old contract and renegotiated a new one, which eliminated the critical percentage of charge pricing structure Little River had been receiving and replaced it with a substantially reduced fee-structure.

Little River claimed that situation—and a $9.1-million “recoup” by Blue Cross/Blue Shield— ultimately caused a severe liquidity crisis from which it could not recover, forcing it into bankruptcy and eventually closing.

While denying Little River’s request for “consequential damages,” on that one point of law, O’Neill sided with LRHC on many others and offered the comment that the insurance company’s attitude toward the problems Little River experienced was “unsympathetic at best.”

Speaking of money, overall Justice O’Neill awarded LRHC $108,341,934 in the arbitration.

Common sense will tell you the bankrupt health care company’s numerous creditors will get almost all of that. That’s a major purpose of a bankruptcy, after all. So what? So this.

Little River’s actions were not the key problem. The key problem was an insurance company that, in the arbitrator’s words, failed to pay for laboratory services provided to its members, improperly recouped funds previously paid to Little River for provided services and failed to timely and appropriately adjudicate laboratory claims submitted by Little River.

It’s bittersweet. It’s always preferable to finally get the right perspective, but this particular one comes a couple of years too late for the patrons of our late, and much needed, hospital.—M.B.