HealthLawProf Blog

Editor: Katharine Van Tassel
Concordia University School of Law

Friday, August 26, 2005

Doctors vs. Managed Care provides an overview of doctor RICO suits currently filed against managed care companies.  It should be interesting to see if this type of suit gains popularity.  According to the article,

Ear, nose and throat doctor Michael Abidin was frustrated. Once again, an insurance company had stiffed him on a claim. Weeks before, the Alexandria, Va., physician had examined a female patient complaining of a hoarse throat. Abidin reviewed her family medical history looking for relatives with throat cancer. Then he slowly threaded a scope through her nose and down her throat for an examination.

Afterward, his office submitted a $205 claim to United Health Care Group Inc. to cover his evaluation and the laryngoscopy. United chose only to pay for the laryngoscopy, which cost $122.69.

The doctor was accustomed to this treatment. During the early months of 2000, Abidin says, insurers had refused to pay for exams before procedures 15 times, maybe more -- he was losing count. Why were insurers rejecting claims for standard medical practices and procedures?

At about the same time, in Birmingham, Joe Whatley Jr. believed he had solved the mystery, which was not limited to Abidin's experience. In his view, insurers were routinely denying claims in order to improve their financial performance. Since 1990, he estimated, managed care companies had saved at least $10 billion by shortchanging doctors. So, with fellow Birmingham lawyer Archie Lamb Jr. and Decatur, Ala., lawyer Nicholas Roth, among others, he filed a class action on behalf of 950,000 physicians, including Abidin.

The insurers, according to the suit, swindled the doctors by systematically and fraudulently cutting their bills. Health plans rely on software to process hundreds of millions of claims a year. Each claim carries some combination of 8,000 five-digit codes to describe individual procedures. Ten leading managed care companies, the lawsuit says, rigged this software to automatically ignore some codes and change others to reflect less costly procedures. They then counted on doctors' offices being too overwhelmed or perplexed to appeal. (Not so Abidin. The doctor did appeal -- twice -- before United Health paid him for the throat exam.)

The insurers insist that they properly handled the vast majority of claims. They say that when they make changes in claims, it is generally because the form was filled out incorrectly or because doctors are padding their bills. In a survey reported in the Journal of the American Medical Association in 2000, 39 percent of physicians admitted that they exaggerated the severity of patients' conditions, made up symptoms or altered diagnoses on claims. Insurers have invested hundreds of millions of dollars in automation to catch these problems, says Jeffrey Klein of New York's Weil, Gotshal & Manges, a spokesman for the defendants in the case. "The industry's reimbursement speed rivals or exceeds the vendor payments of virtually any other industry," Klein says.


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