A group of former Atrium Health employees are suing the system, claiming it has cheated thousands of employees out of pension benefits and caused them to pay more for services it rendered through the network established by the health plan it co-owns.
The lawsuit was filed Monday in U.S. District Court in Charlotte, N.C., by five former Atrium employees who are looking to recoup payments to current and former employees. The system failed to set aside enough money in the employees' defined benefit plan and had a shortfall of $379 million at the end of last year, according to the lawsuit.
The lawsuit also claims that Atrium was paid "far greater amounts ... for medical services rendered through the MedCost network than the plan would pay under other managed care networks, such as Blue Cross Blue Shield of North Carolina."
MedCost is the for-profit health plan co-owned by Atrium and N.C. Baptist Hospital, in Winston-Salem, N.C.
In 2009, some N.C. Baptist employees sued the hospital over its contract with MedCost, saying it paid inflated amounts for the medical treatment that Baptist provided to its own employees.
Atrium employs more than 65,000 people across three states. The lawsuit alleges that Atrium has cheated those employees by skirting ERISA laws, which require employers to set aside minimum amounts to cover pensions. Atrium accomplished this by falsely claiming it is a governmental agency, according to the lawsuit.
"Plainly and simply, Atrium Health is not nor ever has been a government entity," said Karen Handorf, partner at Cohen Milstein Sellers & Toll, the firm representing the employees. "Atrium is a healthcare behemoth trying to get away with spending money to expand its operations rather than on its employees."
An Atrium spokesperson said the system was reviewing the lawsuit.
This is the second time in less than a week that Atrium makes news based on legal issues. On Nov. 15, the U.S. Justice Department said it had reached a settlement with Atrium that would prohibit the system from using anticompetitive steering restrictions in contracts between commercial health insurers and its providers.
The proposed settlement, which must be approved by the court, also bars Atrium from seeking contract terms or taking action that would prevent or penalize steering by insurers in the future. Steering is a strategy used by insurers to direct patients to certain healthcare providers.
Atrium released a statement that said the anti-steering language in question is from contracts created as long ago as 2001 and was added to "ensure Atrium Health was provided an equal opportunity to compete for patients." Atrium said its contracts with insurers have evolved since then to reflect current practices. It also noted that the settlement is not an admission of wrongdoing and it will not be required to pay fines or penalties.
