CareSource headquarters in downtown Dayton. The Medicaid managed care provider recently lost its appeal to vacate an arbitrator’s ruling that it pay Dayton-based Kettering Health Network $2.8 million for underpayments for hundreds of outpatient surgeries. TY GREENLEES / STAFF

CareSource must pay millions to Kettering Health, court rules

An appeals court has ruled that Dayton-based health insurer, CareSource, must abide by an arbitrator’s decision that it pay Kettering Health Network millions of dollars in back payments for 588 outpatient surgeries performed on CareSource members between 2001 and 2011.

A three-judge panel of the Second District Court of Appeals in Dayton decided the Montgomery County Common Pleas Court was correct in ruling last summer that the arbitrator had the authority to an award of $2.8 million to Kettering for underpayments from CareSource under terms of two separate contracts agreed to in 1987 and 2005.

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“We are pleased the court agreed with the arbitrator’s decision. It affirms our assertion that we were not reimbursed per the terms of our agreement with CareSource,” Kettering said in a statement.

Kettering — one of the area’s largest hospital systems with about $1.5 billion in annual revenue — had sought a judgment of $4.1 million for underpaid surgical claims in a complaint filed in March 2013. But a judge ordered the case to arbitration.

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Last August, an arbitrator with the American Hospital Lawyers Association issued the final $2.8 million award, which was confirmed by the common pleas court. CareSource contested the lower court’s ruling in its appeal to the Second District Court, arguing the arbitrator exceeded his powers in determining the award.

CareSource officials declined to comment on the appellate court ruling.