New York Doctors Sue HMOs

Published November 1, 2001

The Medical Society of the State of New York (MSSNY), on behalf of its 27,000 physician members, has sued six major HMOs for allegedly engaging in wrongful practices—including the arbitrary denial of “medically necessary” care, breach of contract with doctors, and the use of computer programs to automatically reduce or deny claims.

The six separate lawsuits name Aetna, CIGNA, Empire Blue Cross and Blue Shield, Excellus, Oxford, and UnitedHealthCare. They echo claims made in similar lawsuits against health plans that are now pending before a federal judge in Miami, who must decide whether to grant the lawsuits class action status or dismiss the cases entirely.

The MSSNY lawsuits were filed August 15, 2001, in New York State Supreme Court. They request that the court put an end to “destructive, ongoing practices by managed care insurance carriers.” Individual doctors, who are MSSNY members, also filed six separate lawsuits against the same insurers, seeking class action status and undisclosed monetary damages.

MSSNY President Dr. Robert Bonvino says the legal actions are “the culmination of years of intransigence by the managed care insurance carriers.” Additionally, he says “thousands of doctors across New York State, and across the country, are forced to deal as individuals with these multibillion-dollar monoliths which have assumed control over our lives, the lives of our patients, and the practice of medicine.”

But the MSSNY lawsuit is not about protecting patients, say insurance industry insiders. “It is clearly a copycat action aimed at enriching doctors’ pocketbooks,” says Paul Macielak, president of the New York Health Plan Association, an HMO umbrella group to which Aetna, CIGNA, Oxford, and UnitedHealthCare belong. “If the Medical Society and its doctors are truly concerned about patient care, they would use their considerable resources on efforts to improve overall quality of care and reduce medical errors.”

Familiar Charges

The allegations outlined in the lawsuits have become familiar. Among them are allegations that the insurers:

  • Arbitrarily reduce a physician’s payment for medically necessary care by “downcoding,” or changing claims and billing codes to indicate a doctor should be paid less. For example, a doctor conducts an extensive office visit with a patient who has a number of health problems, but is reimbursed only for a simple office visit that is far shorter and less complicated.
  • Bundle claims, or issue a single payment for a group of related medical services, rather than paying for each service individually.
  • Arbitrarily overrule a physician’s determination of medical necessity without conducting a proper analysis or review.
  • Fail to pay physicians in a timely fashion.
  • Fail to pay interest on overdue claims payments, in accordance with the state’s prompt payment law.
  • Force physicians and their staffs to expend an unreasonable amount of time and resources attempting to obtain reimbursement to which they are entitled.
  • Exploit the doctors’ unequal bargaining power to force physicians to enter into one-sided HMO contracts.

Vicki Lankarge is a reporter for The Consumer Insurance Guide.