A Rockland doctor who has filed for bankruptcy protection claims that Fidelis Care health insurance and Refuah Health Center sabotaged his medical practice.
QHC Upstate Medical P.C., of Spring Valley, filed for Chapter 11 reorganization on July 5, declaring $366,049 in assets and $2,289,588 in liabilities.
QHC was forced into bankruptcy, owner Seth Kurtz says in an affidavit filed in U.S. Bankruptcy Court, White Plains, “by Refuah in a concerted action with Fidelis” to block health care reimbursements to the medical practice.
Fidelis and Refuah did not respond to emails requesting responses to the allegations.
QHC had previously sued Fidelis for $2 million, claiming that the insurer had illegally cancelled its service agreement. A Rockland County Supreme Court judge ruled against the medical practice last year and awarded $1.5 million to Fidelis.
Kurtz has appealed that decision.
Kurtz, a pediatrician, formed QHC in 2009 to provide medical services primarily to people from New York City who summered in Sullivan and Ulster Counties.
The practice grew to three clinics, with the main location in Monsey and offices in Brooklyn and Staten Island. The Monsey office has booked more than 17,000 patient visits in less than four years.
In 2020, QHC grossed more than $9 million, according to a bankruptcy schedule, and revenues nearly doubled last year to about $17.9 million.
QHC had signed a standard health services agreement with Fidelis in 2011, and the deal was automatically renewed yearly.
Fidelis, founded in 1993 to serve poor and medically underserved populations, specializes in government programs such as Medicare, Medicaid and Child Health Plus. About 80% of QHC’s patients, according to Kurtz, were covered by the insurer.
In 2019, Fidelis sent QHC an audit letter demanding $1.9 million for nearly five years of alleged improper billings. Seventeen days later, Fidelis declared that the service agreement would not be renewed.
Kurtz says Fidelis did not respond to QHC’s request for documents to support the demand for $1.9 million.
He says losing the Fidelis coverage forced QHC to cease operations at various sites last year.
The audit letter was part of a “coordinated, retributive and retaliatory illegal act,” Kurtz alleges, “initiated by Refuah Health Center Inc.,” a competitor.
Refuah was founded in New Square, Rockland County, in the mid-1980s to provide comprehensive health care to all patients, its website states, “regardless of their ability to pay.” It has clinics in Spring Valley and South Fallsburg, as well as mobile units, and has about 280,000 patient encounters annually.
“It became increasingly apparent that Fidelis’ ultimate goal was not to work with the debtor (QHC) anymore in Rockland County,” Kurtz states, “unless the terms and conditions of our relationship were substantially modified.”
He did not disclose the modified terms.
He also claims that QHC has recently learned that the audit was part of a boycott scheme and that it has discovered new claims against Fidelis and Refuah. He provided no details.
Kurtz says QHC is investigating whether to pursue litigation. It might file claims against Refuah for unfair trade practices, anti-trust, collusion and conspiracy, according to a bankruptcy schedule, and claims against Fidelis for breach of contract, and bad faith and unfair dealing.
QHC is represented by Manhattan attorneys Jonathan S. Pasternak and Robert L. Rattet.
