Afton-based hospital Star Valley Health on Tuesday sued the company running its billing system on claims the company caused the hospital to lose at least $2.5 million.
The hospital, under its umbrella organization North Lincoln County Hospital District, sued Change Healthcare Solutions LLC in the U.S. District Court for Wyoming.
The lawsuit says Change Healthcare Solutions (CHC) failed to file millions of dollars’ worth of insurance claims for the hospital, causing massive losses.
The hospital accuses the company of breach of contract, breach of implied covenant and good faith and fair dealing and negligent misrepresentation.
It’s asking for a jury trial, damages, costs, pre- and post-judgment interest, and any other relief the court deems proper.
The Saga
Star Valley Health operates a critical hospital and nursing facility in Afton.
It retained CHC to handle its billing services and to file claims with insurance payers, says the complaint, penned by the hospital’s attorney Nick Healey of Husch Blackwell LLP.
“CHC repeatedly failed to timely submit claims to payers in line with its (contractual) obligations,” wrote Healey.
The same goes for CHC’s duty to submit emergency medical services, or ambulance claims, the complaint says.
Many of the exact terms of the two entities’ contract are redacted, in the document.
The complaint says CHC failed to file claims both under its first software system and its second software system. During the use of the latter system, CHC had staffing issues that caused a backlog in claims processing, wrote Healey.
“These failures were not the fault of SVH; rather, SVH fully performed under (the contract) by paying CHC’s invoices each month until it discovered CHC’s breach,” says the complaint.
Under a June 3, 2024, mutual termination agreement, CHC agreed to keep providing services during a phase-out period of their working relationship, through May 1, 2024, Healey wrote.
At the end of that period, SVH agreed, it would discontinue all use of the CHC services and destroy all CHC software.
But CHC kept failing to submit claims on time during that phase, the complaint alleges.
On Oct. 31, 2024, the hospital sent the company a demand for payment, over more than $3.7 million worth of late or failed claims filings, wrote Healey.
Earlier that year in February marked the first time the hospital learned CHC had breached its contract, the complaint alleges, and at that time the hospital started withholding payments on CHC invoices.
But in a “showing of good faith” the hospital deducted its own outstanding fees from its October demand for repayment, making the requested amount at that time $1.63 million, the complaint says.
CHC still “failed to cure the timely filing deficiencies,” prompting the hospital to send another demand on Dec. 2, 2024, the document adds.
Two weeks later the hospital sent a demand for mediation, but CHC declined to mediate, says the filing.
The Alleged String-Along
Optum acquired CHC during the conflict.
The complaint accuses Optum of indicating for months that it was going to correct the issue, but then ultimately pivoting and saying – “for the first time” – that it was withholding information from the hospital until the hospital paid its outstanding invoices.
That was in April, the complaint says.
“Star Valley responded on May 30, 2025, pointing out that CHC had reassured SVH numerous times that it was working to obtain the EMS inventory file,” the complaint says.
The hospital theorizes in the complaint that it will uncover even more losses as it probes the issue, but because of the company’s “delay,” it will be too late to fix those losses.
Cowboy State Daily was unable to reach Optum/CHC for comment on Wednesday, amid a phone loop of an automated voice demanding patient information.
Community Outcry
The hospital found itself under scrutiny in May, when community members questioned the cause behind a $3.5 million shortfall.
Star Valley Health streamed a public meeting in late April to explain the problem, the Star Valley Independent reported.
Star Valley Health CEO Dan Ordyna said at the time that the shortfall stemmed from three basic reasons:
• Sizable increases in employee health care costs and its own 50% self-insurance increase;
• The opening of the 10,000 square foot expansion in Alpine in January, which burdened operating costs with start-up costs;
• And “an error in our accounting system and our electronic medical record system.”
Ordyna told the Star Valley Independent the hospital would address those challenges “head on.”
Clair McFarland can be reached at clair@cowboystatedaily.com.
