Three State MD Associations Join Lawsuit Against HMOs
State medical associations in California, Georgia and Texas joined individual doctors from seven states yesterday in a federal lawsuit accusing eight health insurers of "a pattern of racketeering activity" to deny necessary medical care, the New York Times reports. Representing more than 75,000 physicians, the state organizations contend that the insurers -- Aetna Inc., Cigna Corp., Coventry Health Care Inc., Humana Inc., UnitedHealth Group of Minnesota, Aetna's Prudential HealthCare unit, Health Net Inc., PacifiCare Health Systems and WellPoint Health Networks Inc. -- used "cost-based criteria to approve or deny claims" and offered "cash incentives" to claims reviewers who would "deny or limit" tests and treatments that doctors considered "necessary." The plaintiffs in the case include individual doctors from Alabama, California, Colorado, Florida, Georgia, Kentucky and Texas. Miami Federal District Court Judge Federico Moreno will hear the case.
The doctors say that the companies paid claims based on "purported actuarial criteria, unrelated to medical necessity," guidelines that they developed with the actuarial firm Milliman & Robertson, the consulting firm InterQual and others. According to the plaintiffs, the insurers used software sold and licensed by McKessonHBOC Inc. and others that "changed standard codes describing treatments to reduce payments." The complaint amended an earlier filing that Moreno had rejected for "not clearly showing" that the insurers "could be accused of violating anti-racketeering laws." In the amended filing, the plaintiffs contend that the companies "have undertaken a common scheme to systematically deny, delay and diminish payments to health care providers" in violation of the federal Racketeer Influenced and Corrupt Organizations Act. Although representatives for several of the insurers declined to comment on the complaint, Aetna spokesperson David Carter said, "As a general matter, many of these suits are similar, and we continue to believe they are without merit. We will continue to aggressively defend these actions and are confident that we will prevail, based on the merits, if the actions ultimately go forward."
Kim Ross, a vice president of the 37,000-member Texas Medical Association, said that the group's governing board approved joining the suit after hearing from members. According to TMA President Dr. Jim Rohack, "some, not all, investor-supported health plans" had "skirted" state laws and regulations and prevented "patients from receiving appropriate medical care." He said, "The TMA is not against all managed care plans. But we had to enter the legal arena to ask a federal judge to stop these abusive practices" (Freudenheim, New York Times, 3/27). Ross "used stronger language" to explain the group's involvement, concluding, "This is our Alamo" (McNair, Miami Herald, 3/27). California Medical Association CEO Jack Lewin said, "We have to get the health plans to the table. The health plans have been exerting undue influence in a ... marketplace that prevents us from providing the best care to patients" (Gellene, Los Angeles Times, 3/27). In addition, Paul Shanor, executive director of the 8,000-member Medical Association of Georgia, said that doctors in the state "have been frustrated by not receiving the pay that they are supposed to receive under contracts with the insurance industry and Georgia law." Archie Lamb, the lead lawyer for the doctors, said that participation by "three of the most influential medical associations rebuts the industry's contention that the complaints of physicians are isolated or anecdotal or trial lawyer driven." He said, "Right now, the health plans' only accountability is to Wall Street" (New York Times, 3/27). "Give us a chance to prove the allegations that the physicians of America have been screaming about for the last 10 years," Lamb added (Banstetter, Ft. Worth Star-Telegram, 3/27).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.