On Wednesday, April 23, OSF Healthcare System filed suit in U. S. District Court (read the complaint here) against Dr. Joseph Banno and Peoria Day Surgery Center: three counts of racketeering and one count of consumer fraud and deceptive business practices.

There’s already bad blood between these two groups. In September 2006, Peoria Day Surgery Center filed an antitrust lawsuit against OSF Healthcare, doing business as OSF St. Francis Medical Center. The charge was that OSF was participating in anti-competitive business practices and trying to force Peoria Day Surgery out of business. That case is still pending, currently scheduled to go to trial in December of this year.

This new case alleges that Dr. Banno and Peoria Day Surgery Center (PDSC) have been perpetrating a fraudulent billing scheme since as early as 1997. Basically, the suit says that Banno and PDSC were not charging their patients the proper co-insurance amounts, instead passing those costs on to their patients’ employers through deceptive billing practices.

Besides the deceptive billing practices, this arrangement also caused a lot of people to choose PDSC for their surgical needs who would have otherwise gone to OSF. In other words, there was no co-pay at OSF, but there was supposed to be a 30% (later 50%) co-pay at PDSC. If PDSC had been charging patients the proper co-pay amounts, most patients arguably would have gone with the cheaper option — OSF. Thus, OSF lost considerable revenue because of PDSC’s practices, the suit alleges.

OSF is suing for unspecified damages and demanding a jury trial.

Not sure why this major development has not been reported in the mainstream media yet.