A lawsuit from a former member of Nuvance Health's C-suite sheds light on an accounting discrepancy that's the subject of an ongoing investigation.
Formed through the April 2019 merger between Western Connecticut Health Network and Health Quest, Nuvance learned later that year that Health Quest had overstated the amount it was owed by patients by an estimated $75 million. Robert Diamond, Health Quest's former chief information officer who held the same position at Nuvance after the merger, sued Nuvance on Wednesday alleging he was improperly blamed for the mishap.
Diamond's complaint also says he was improperly fired, defamed, denied benefits and that the situation caused him to be denied a prospective job afterward. Diamond, who currently serves as chief information officer for Kaleida Health in Buffalo, New York, says his reputation in the Hudson Valley business community cannot be repaired.
Diamond's complaint names LaGrangeville, N.Y.-based Nuvance as a defendant, as well as several of its executives, including CEO John Murphy, Chief Financial Officer Steven Rosenberg, Chief Human Resources Officer Catherine Frierson and board members Steven Landt and Mary Madden. Nuvance declined to comment through a spokesman.
Diamond's attorney, Nathaniel Charny of Charny & Wheeler in Rhinebeck, N.Y., did not respond to an interview request.
Diamond, who became Health Quest's CIO in 2007, claims in his complaint that the problem began in fall 2017, when Health Quest went live with a new Cerner patient accounting and billing system. The complaint says the person in charge of patient accounting, Health Quest's Chief Financial Officer Katherine Bacher, was new in her position and had "little or no CFO experience, with no background in revenue cycle management."
One month into the transition, Diamond alleged many claims required investigation by patient accounting staff, which made those employees unable to secure timely payment on other claims. That, in turn, impacted the accounts receivable valuation. Health Quest allegedly determined the problem was due to a claims contract management system issue that incorrectly netted the claims down to expected payment and not gross accounts receivable.
Diamond said he told Bacher and Health Quest's CEO, Robert Friedberg, about the issue in late 2017. In particular, he said he warned them that the problem would lead to an overstated accounts receivable value.
Diamond said Friedberg repeatedly referred his concerns to Bacher, while Bacher allegedly told him to mind his own business.
Health Quest in January 2018 retained a third-party consultant to work on the issue, despite Diamond's assertion that the consultant did not have the proper skills. The complaint says Cerner had previously fired the consultant from similar work due to "incompetence and staff divisiveness."
Diamond's complaint alleges the consultant made the problem worse, and claims he repeatedly told Friedberg that.
Diamond said he even shared the results of an audit by Cerner he commissioned in April 2018 on the accuracy of the top five payors' contracts, which revealed a 100% error rate. It wasn't until a second audit found the same result, that Diamond said Friedberg agreed to let him fix the problem. The consultant then quit.
Within four months, Diamond said he was able to solve the claims issue. He said he assumed Bacher and her team had made appropriate adjustments to the balance sheet and reported them to the board to ensure timely and accurate reporting of the accounts receivable valuation.
The merger to form Nuvance closed April 1, 2019, but the complaint says it wasn't until September 2019 that leaders discovered Health Quest's accounts receivable overvaluation. Diamond's complaint says he first learned in October through a phone call from Friedberg. Before that, he had assumed that Bacher and Nuvance's Chief Financial Officer, Steven Rosenberg, had fixed the valuation issue.
Diamond said he was not invited to attend an October board meeting to discuss the issue. At that meeting, he said Rosenburg, Murphy and Frierson blamed him for the overvaluation. He claims they did so partly to eliminate all of Health Quest's leadership from the newly-created Nuvance.
Diamond was fired on Oct. 30, the day after the board meeting. He said he did not receive severance because Nuvance wanted to change his status from terminated to administrative leave so he could help investigate the issue, which he declined.
After that, Diamond claims statements by Landt and Madden foiled a prospective job when the would-be employer learned about his termination. He claims he's owed a retention bonus worth about $29,000 and a severance plan that provides one year of base salary.
Diamond said his new job with Kaleida, which he started in December 2019, has caused him and his family "significant stress and hardship" because it pays less and requires he commute to Buffalo from their home in Newburgh. It also reduced the value of his retirement by about $200,000.
Diamond's lawsuit alleges denial of benefits, interference with employment, interference with prospective contractual relations, defamation, emotional distress, breach of covenant of good faith and fair dealing and inference with prospective economic advantage. He seeks a variety of damages, an order prohibiting future defamation and attorney's fees.
