Blue Cross and Blue Shield of North Carolina has filed a lawsuit accusing a Charlotte-based children's therapy practice of submitting $1.1 million in fraudulent insurance claims, alleging the company billed for services with no proof they were ever delivered. The insurer wants a court to force Child and Family Development, Inc. to pay back the money, plus damages, interest and legal costs.
The lawsuit, filed in early September, accuses Child and Family Development of improper and fraudulent billing tied to $1.1 million in what Blue Cross NC calls unearned claims, according to the Charlotte Observer. Blue Cross NC filed the case in the Superior Court Division of Durham County before it was assigned to the North Carolina Business Court, which handles complex business litigation, as reported by Yahoo News. This was not Blue Cross NC's first attempt at the case — in the earlier case, Child and Family Development filed a motion to dismiss, and a judge later ordered additional briefs before ruling on that motion, according to the Charlotte Observer. The insurer filed its new complaint on September 2, according to WSOC TV.
What the Insurer Says Went Wrong
The allegations center on evaluation and management billing codes submitted between August 2017 and July 2022 for administrative duties that Blue Cross NC says were performed alongside physical, occupational and speech therapy services, per the Charlotte Observer's reporting. The insurer's special investigations unit flagged the practice in January 2023 and requested medical, operational and credentialing records for a random sample of 419 member claims, the outlet's report states.
According to the same account, the claims that were reviewed lacked proof of direct patient care, were billed by therapists for services outside their scope, or listed the wrong provider entirely. Blue Cross NC says it issued a formal repayment demand for $1.1 million, and that Child and Family Development refused to return the funds — a refusal that led directly to the litigation now underway.
What Blue Cross NC Is Asking the Court to Order
Beyond the $1.1 million figure, Blue Cross NC is seeking interest, legal fees, court costs and punitive damages. The insurer has asked the court to order Child and Family Development to return all improper payments, including money the practice collected directly from patients, according to Yahoo News's coverage of the filing.
Blue Cross NC serves more than 5.8 million people across North Carolina, per the Charlotte Observer, giving the insurer a broad footprint in disputes over how providers bill for pediatric therapy services statewide.
The Practice Pushes Back
Child and Family Development's attorney, Jared Gardner, flatly denied any wrongdoing. “The accusation that there is any fraudulent conduct on behalf of or by Child and Family Development is utterly baseless,” Gardner told the Charlotte Observer.
Gardner also argued that Blue Cross NC missed the standard two-year deadline to recover the money, and separately said the insurer changed its policy around June 2021 and stopped paying the evaluation and management codes at the heart of the dispute, according to the same report. Blue Cross NC has not offered a public response to the statute-of-limitations argument in the available reporting.
Who Is Child and Family Development
Child and Family Development, Inc. is listed in the National Provider Identifier registry. On its own website, the company says it was established in 1980 with locations in Midtown and Pineville, describing itself as a service provider for assessing the needs of children and establishing recommended treatment plans.
The case remains active in the North Carolina Business Court, and no ruling or hearing outcome has been reported.
