Texas Doctors Sue HMO's

Tuesday, March 27th 2001, 12:00 am

By: News On 6

Two Texas medical associations representing 37,000 physicians filed a federal lawsuit Monday accusing the nation's largest health insurers of fraud, racketeering and conspiracy by systematically refusing to pay for medical treatments doctors deemed necessary.

The Texas Medical Association, the Denton County Medical Society and dozens of individual physicians filed a lawsuit seeking to reduce the role that health maintenance organizations play in the relationship between doctors and patients.

The lawsuit, which seeks class-action status, names Cigna Corp., Humana Inc., Aetna Inc., PacifiCare Health Systems, Prudential Insurance Co., United Health Group and Wellpoint Health Networks as defendants.

Lawyers for the HMOs denied the charges and said they would not comment further on pending litigation.

Representatives for most of the companies also declined to comment.

Aetna issued a written statement late Monday: "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."

"We're disappointed that they've decided to do this; it will increase costs for us and them and eventually employers," said Leah Rummel, executive director of the Texas Association of Health Plans, an insurers'advocacy group.

Legal analysts said the lawsuit has the potential to revamp how managed care companies operate and how health care is delivered.

"This is a huge lawsuit with historic potential," said Frank Newton, dean of the Texas Tech University School of Law.

"The impact of this case is right there with tobacco, maybe even bigger because it impacts so many more people."

The allegations of Texas physicians are combined with similar complaints by California and Georgia doctors in one 80-page lawsuit filed late Monday in federal court in Miami.

The judge overseeing the class-action lawsuit filed last year by patients against the HMOs will handle the case.

Texas Medical Association leaders said Monday that their primary goal is to force the HMOs to change how they do business, not put them out of business.

"In fact, we think financial standards and managed care are necessary," said Kim Ross, TMA vice president for public policy.

"But financial considerations and profits must not dictate how physicians treat their patients, and that is what the managed-care companies are doing now."

Wrong priority

Archie Lamb, an Alabama lawyer representing the California, Georgia and Texas physicians, said the insurance companies invited the litigation when they decided to make "Wall Street's expectations their priority and not the health care needs of our communities."

The physicians said money is not their motive. However, the suit asks the court for compensation that they say the HMOs have denied for years.

TMA lawyers said they do not know how much that would be, but analysts said it could be billions of dollars.

By accusing the insurers of violating federal racketeering laws, the doctors could recover triple monetary damages. The lawsuit also asks for punitive damages.

Legal analysts said Monday that the amount of money at stake puts pressure on the HMOs to consider an out-of-court settlement.

Aetna has had settlement meetings, but both sides said Monday that discussions never made it beyond the preliminary stage.

"This was a last resort," said Dr. Barry Jacobs of the Denton County Medical Society.

"We tried negotiations for years, but it did no good. We complained to the Texas Department of Insurance, but it did no good. We didn't any have other options."

The claims

Specifically, the lawsuit states that:

â€¢ Insurers illegally use their "monopolistic power for financial gain" by "manipulating and strong-arming" physicians into denying medical care for patients. If doctors don't agree to the restrictive terms set by the company, the doctor is "blacklisted" from the plan and loses the patient to a competitor, they said.

â€¢ HMOs "utilize cost-based criteria" and not "medical necessity" in determining whether to approve treatment. The physicians say that this unfairly puts money ahead of appropriate health care.

â€¢ Companies offer financial incentives to claims reviewers who "deny a certain percentage or absolute number of reported claims." Doctors say this procedure improperly encourages HMO employees to reject claims.

â€¢ Insurers systematically "down-code" claims. For example, the reimbursement code for examining a mole is #99213. The code for removing the mole is #99215. But the cost difference is several hundred dollars. The suit says the HMOs automatically revert to the least expensive code.

"The promise of managed care in the 1980s was that for a reduced fee, they would reduce the hassles and provide efficient payments," said Dr. Bohn Allen of Arlington.

"The reality is that we have increased costly hassles, delayed and denied payments, the patient-physician relationship has been severely injured and the practice of medicine has been damaged."