Mayo Clinic has filed a $740,000 civil lawsuit against Sanford Health Plan, South Dakota-based Sanford Health’s insurance arm, alleging that the Health Plan breached its contract with Mayo Clinic when it did not cover expenses for a patient who was hospitalized in Rochester, Minn.

According to the original complaint filed in Olmsted County District Court on Dec. 13, a patient was transferred from a CHI Saint Alexius Health facility in North Dakota to Mayo Clinic Hospital on Feb. 5, 2022, “in order to receive a higher level of care in Mayo’s Intensive Care Unit to treat a serious medical condition.”

The transfer paperwork listed the patient’s primary insurer as Sanford Health Plan. The patient, identified in the lawsuit by the initials C.G., also had secondary coverage through Blue Cross Blue Shield North Dakota Medicaid. The complaint says Mayo Clinic reached out to Sanford Health Plan to “verify eligibility and obtain preauthorization” for the patient’s care.

“On February 8, 2022, Sanford sent a fax to Mayo approving patient C.G.’s inpatient admission for five days,” the complaint states. “Sanford subsequently approved and authorized all days for the health care goods and services provided by Mayo to patient C.G. up to the date of discharge, March 29, 2022.”

Sanford Health Plan also paid some claims during C.G.’s two-month hospital stay, the complaint says.

On April 15, 2022, two weeks after the patient left the hospital and after Mayo Clinic had billed for services, Sanford contacted Mayo Clinic “indicating that the actual payor was a tribal plan, later determined to be the Three Affiliated Tribes Tribal Health Plan,” which is administered by Sanford. That tribal plan is a “payor of last resort,” the complaint says, meaning it is an “entity that pays after all other programs have been pursued for enrollment and payment,” per the Department of Labor.

“Then, on April 27, 2022, Sanford began requesting that Mayo refund the payments made on the claims submitted, and that Mayo should bill BCBS ND as primary; Mayo refunded these payments in good faith,” the complaint says.

When Mayo Clinic billed Blue Cross Blue Shield, the lawsuit says, that insurer denied the claims because preauthorization was not obtained.

Now, Mayo Clinic is suing for $739,956.20 — the cost of the patient’s unpaid care — alleging breach of contract, promissory estoppel and negligent misrepresentation.

“Had Sanford not held itself out as the primary insurer, preauthorized all dates of service, paid several claims for the relevant dates of service, and fail(ed) to inform Mayo about the true nature of the payor for more than two months after the initial admission and authorization,” the lawsuit says, Mayo Clinic would have requested preauthorization from Blue Cross Blue Shield — and possibly would have received payment from that insurer.

In a statement to the Post Bulletin, Sanford Health Plan said it “does not comment on active or pending litigation to protect the confidentiality of those involved and out of respect for the legal process. Sanford Health Plan is committed to providing a high-quality experience to all our members.”

The Post Bulletin reached out to Mayo Clinic for comment but did not receive a response.

The lawsuit has been moved to the U.S. District Court of Minnesota. A pretrial conference is scheduled in Minneapolis on Feb. 4. Sanford has filed a motion to dismiss the complaint.

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