Atrium fires back in $62M lawsuit from Medicaid provider over failed deal
In an ongoing lawsuit over a Medicare Advantage plan, Atrium Health is opposing an insurance provider’s request to amend its complaint, which may cost the Charlotte hospital giant more money if it loses in court, according to North Carolina Business Court records.
In May 2024, ApexHealth claimed that Atrium breached a contract to work together on a new Medicare Advantage health plan. The Detroit-region based Apex claimed it lost $62 million setting up the program as a result.
Apex is now seeking to amend its suit and add a claim of unfair and deceptive trade practices. It made that motion last month, nearly 18 months after it initially sued Atrium.
In a brief filed Wednesday, Atrium argued that Apex is making the amended motion in bad faith. Atrium stated that if the court grants Apex’s motion, it would increase Apex’s claim for damages to more than $186 million because of treble damages associated with deceptive trade practices and attorneys’ fees.
Atrium also questioned Apex’s timing, noting the motion was filed just days before a scheduled mediation. Lawyers for Atrium said the timing suggests that the new motion is a “chiefly economic” and a “piggyback” claim, according to the court file.
About the suit against Atrium
Apex alleged that Atrium misled it into a 2021 partnership agreement promising collaboration on a Medicare Advantage plan, despite having no intention of honoring those promises. Internal emails show that Atrium had decided in advance not to treat Apex as a true partner, Apex claimed.
If not for this deception, Apex would not have entered the agreement or invested millions in what it calls a “pre-doomed plan,” according to the motion. Apex argued that the request to amend is timely, and will not unfairly harm Atrium since the new claim is closely related to its original breach of contract allegations.
More on the court battle
Medicare Advantage, an insurance plan offered by private companies in partnership with the federal Medicare program, is available to Americans age 65 and older, as well as to some younger individuals with specific disabilities or health conditions.
In 2021, Apex announced that Atrium would serve as the cornerstone of its integrated network of healthcare providers and hospitals for a new Medicare Advantage plan in the Carolinas.
According to the Apex lawsuit, the company planned to offer these plans beginning in 2022, with Atrium designated as the exclusive healthcare provider for members in regions where it operates, subject to network requirements.
However, Apex claimed that the partnership quickly faltered, with enrollment in the Medicare Advantage plan falling below 200 members. Apex attributed this to Atrium’s alleged lack of cooperation, stating it led to tens of millions of dollars in lost revenue and missed future earnings.
The complaint accused Atrium of making its own financial interests a priority over its contractual obligations, alleging it failed to provide necessary resources, did not meaningfully support marketing efforts and in some cases actively hindered the plan’s success.
In its July 2024 response, Atrium denied all of Apex’s allegations. Atrium stated Apex’s losses were the result of its own decisions, not any breach of contract by Atrium.
Atrium contended it provided the agreed-upon support and Apex never raised concerns about Atrium’s performance during the partnership.
Additionally, Atrium stated that Apex failed to secure necessary approval from the Centers for Medicare & Medicaid Services, making the plan’s success impossible.
The case remains ongoing.
Representatives and attorneys for Apex did not respond to requests for comment from The Charlotte Observer. Atrium declined to provide additional information beyond court filings.
About Atrium Health and ApexHealth
Atrium Health is a part of Charlotte-based Advocate Health. The hospital system is the third-largest nonprofit health system in the U.S. and serves about 6 million patients. Atrium employs over 160,000 people across 69 hospitals and more than 1,000 care locations.
Teaming up with Wake Forest University and Wexford Science & Technology, Advocate opened Charlotte’s first four-year medical school. Classes at the new Wake Forest University School of Medicine–Charlotte began in July.
Apex was formed in 2018 to offer Medicare Advantage plans in the Carolinas, with plans to expand into bordering states. It’s listed as a North Carolina corporation but is based in Michigan.
