The Orange County Register

Three Orange County hospitals have sued Kaiser Permanente, alleging $10 million in unpaid bills from treating the HMO's patients who come to their emergency rooms.

The hospitals, West Anaheim Medical Center, Huntington Beach Hospital and La Palma Intercommunity, are owned by Dr. Prem Reddy of Prime Healthcare Services. The suit was filed late last month in Orange County Superior Court.

Reddy is an unconventional hospital owner because he cancels contracts with HMOs so he can charge them higher rates when their patients come to his hospitals. He refuses to automatically transfer emergency patients to hospitals in their insurance network, a practice that has drawn fire from other hospitals and insurance companies.

At issue is whether a patient should be admitted to a Reddy hospital or is stable enough for a safe transfer.

"When you transfer a patient and something goes wrong the malpractice is not against Kaiser, it's against the doctor and hospital that transfers the patient," Reddy said Wednesday.

Kaiser spokesman Jim Anderson declined to comment on the lawsuit, but said last year the health plan spent $1.2 billion for patient care at non-Kaiser hospitals. But he said stable patients should be transferred back to Kaiser hospitals "where we have access to their full medical history."

Michael Sarrao, an attorney for the three hospitals, said when Kaiser does pay, it doesn't pay an adequate amount.

A similar suit against Kaiser, brought by Tenet Healthcare Corp., which owns or formerly owned nine Orange County hospitals, is pending.

The hospitals are among 20 that are part of a statewide lawsuit that claims Kaiser owes $16 million in medical bills. The suit alleges that Oakland-based Kaiser failed to pay rates set by contract from 2000 to 2004.

Contact the writer: 714-796-3686 or cperkes@ocregister.com