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How some rural hospitals were used to score huge paydays

Loophole for rural hospitals
Some rural hospitals used for big insurance reimbursements thanks to loophole 04:41

GRACEVILLE, Fla. -- As many Americans struggle to pay rising health insurance premiums, a CBS News investigation has uncovered a scheme that could make those premiums go even higher. It raises costs for insurers, who could then pass the increase along to you.

Jorge Perez is CEO of Empower Group, a Miami-based healthcare company that claims to specialize in saving rural hospitals.

"We've gone to these towns and basically some of them we bought out of bankruptcy or they were just days before closing," Perez said.

But one of the hospitals Perez promised to save in the Florida panhandle is now shut down and boarded up. We spoke to attorney Michelle Jordan who represents that hospital, Campbellton-Graceville, which was days away from closing when Perez and his partners swooped in. We asked if she wondered, what was in it for them?

Attorney Michelle Jordan CBS News

"Yes, and how the hell did you find Graceville, Florida?" Jordan responded.

Perez's associates agreed to pay off the hospital's debt and manage it for a fee of $30,000 a month. Jordan begged the board not to sign, but she says they wanted to keep the hospital open. It did, thanks in part to deals Perez made with drug testing laboratories all over the country.

To keep rural hospitals in business, insurance companies reimburse them for tests at much higher rates. A lab in Dallas might get $200 for a urine screen. The same test billed through a rural hospital could be more than $1,000. That explains why Perez struck deals with dozens of labs around the country to pass their testing through Campbellton-Graceville, and their billing along with it.

"I can tell you what was actually funneled through the facility, and that was over $120 million in about 14 months," Jordan said. "It sounds too good to be true."

The board finally came to the same conclusion and stopped the lab program. But that created new problems. On one side, dozens of labs claimed the hospital owed them millions. On the other, the insurance companies said they'd been over-billed by millions. After more than half a century, the hospital closed its doors.

Rural hospitals can get higher insurance reimbursements CBS News

"I could have saved it if I would have been left but I wasn't. That wasn't my hospital, it wasn't my contract. I didn't own it," said Perez. "I just went in there to do the billing and to provide technology."

Perez minimized his role at Campbellton-Graceville to us. So we showed him some of the lab contracts he signed.

"This is all forged," he said. "By the way, this isn't even my signature. I'd love to get a copy of all this."

But when we asked who forged the documents, he said he had no idea.

According to bankruptcy filings, the hospital is trying to recover more than $3 million it claims Perez obtained fraudulently, and the hospital closure has left a community without emergency healthcare. Jordan says that means if someone needs care, they would have to drive 20 or 30 miles away.

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