Hospital Sues American Apparel for $837,000

LOS ANGELES (CN) - American Apparel owes Cedars-Sinai Medical Center $837,000 for an undocumented mother the retailer fired and cut from its employee healthcare plan - after her baby had spent three months in intensive care, the hospital claims in court.

American Apparel owner Dov Charney has been sued at least 24 times since 2005, according to the Courthouse News database. Nine of the lawsuits, some of them lurid, alleged sexual harassment from the CEO; four lawsuits were class actions. Charney is not named as an individual defendant in Cedars-Sinai's complaint in Superior Court.

Cedars-Sinai claims that American Apparel cited "bad publicity" as the reason it would not try to recover $493,144 of the $1.3 million bill for medical services provided to the unidentified mother's prematurely born son.

But the retailer "reversed course," and asked Cedars to give back the portion it had paid, Cedars says in the lawsuit.

"American Apparel improperly asserts that, because patient mother was allegedly an undocumented citizen, patient mother's health insurance coverage is voided and American Apparel may retroactively revoke the authorizations and assurances provided to Cedars-Sinai and refuse to pay for the services it authorized," the complaint states.

Cedars says that American Apparel "holds itself out as utilizing fair labor practices," and has advocated for "the legalization of undocumented workers."

In this case, though, American Apparel never told the mother it would not pay for her baby's care, or give her the "legally required disclosures" about why it was denying coverage, the hospital says in the complaint.

American Apparel has a "well-documented history of problems employing illegal immigrants," Cedars claims.

At least four of the 24 lawsuits against Charney prominently mention immigration raids; four more claim the company deceived investors about its employment practices. Most of those eight lawsuits are shareholder derivative complaints.

Cedars-Sinai claims that American Apparel was forced to fire almost 1,800 workers after Immigration & Customs Enforcement discovered that many of its employees were working illegally in the United States.

American Apparel claimed publicly that it has "cleaned up its act," but it still hires undocumented workers, Cedars-Sinai says in the complaint.

Cedars-Sinai says it admitted the mother in December 2010 while she was still covered under American Apparel's self-funded insurance plan, into which the mother had been paying $200 per month.

The plan is administered by non-party Anthem Blue Cross of California.

Cedars-Sinai says the mother's baby boy was born with "serious health issues," and spent 92 days in intensive care.

"He was released from the hospital on March 24, 2011 after Cedars-Sinai saved his life and stabilized his condition. All of the services provided and expenses incurred by Cedars-Sinai to patient baby were expressly authorized, in writing, by American Apparel's agents on behalf of American Apparel," the lawsuit states.

Cedars-Sinai claims that American Apparel had reason to believe the mother was working illegally in the United States but "did not take any steps at the time to suspend" the woman.

"To the contrary, American Apparel and/or American Apparel's agents processed her health insurance paperwork that added patient baby as a dependent covered under American Apparel's self-funded plan. Patient mother was also allowed to participate in open enrollment in the plan for the following year," the complaint states.

American Apparel did not cancel the mother's benefits until April 2011, more than two weeks after she was fired, the hospital claims.

Cedars-Sinai seeks $837,785 in damages for breach of contract, services rendered, negligent misrepresentation and unfair business practices.

It is represented by Devin Senelick of Hooper, Lundy & Bookman.

American Apparel spokesman Ryan Holiday said the retailer's "primary concern is that its employee and her baby received first-class medical care from Cedars Sinai and are doing well."

"We are confident that the company's lawyers will work with Cedars Sinai and the involved insurance companies to fairly resolve this matter," Holiday said in an email.

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