This lawsuit is long, long overdue.
United Health Group, its United HealthCare and Oxford subsidiaries and several United and Oxford executives, including former United CEO William Maguire, are accused of violating the U.S. Racketeer Influenced and Corrupt Organizations Act in a law suit filed Tuesday in the U.S. District Court, Eastern District of New York, by Jamaica Hospital Medical Center and Flushing Hospital Medical Center.
The lawsuit has identifed UnitedHealth as operating a rogue business plan. How long have I been telling you that the business plan of the for-profit insurance industry is to delay, deny and deceive? If this isn't a rogue business plan, then what is?
The rogue business plan involves, not paying doctors, not reimbursing patients who go out of network, and retroactive payment denials after a patient has had a hospitalization approved and, in fact has been hospitalized.
The hospitals, in their RICO suit, accuse United Health Group and United HealthCare and other subsidiaries of implementing a "rogue business plan" on a "national level" that, for more than three years, "has contributed to UHG’s profits, which, in turn, have been utilized in attempts to justify outlandish compensation to Maguire and to enhance the value of illegally backdated options for UHG stock" which were given to Maguire, other UHG senior executives and to managers of its business units.
. . . David Rosen, president and CEO of both hospitals, said: "UHG, United and Oxford have clearly established and refined a pattern of deceitful practices and myriad means to improperly retain money they owe to service providers, and to arbitrarily and unjustifiably deny payment for their members’ medical services under their plans.
I've started to think that perhaps we need a national databank to document insurance company atrocities against the American people. The criminal activity of UnitedHealth is certainly not unique. This ort of corruption is widespread and once again I ask myself, when will there be a congressional investigation?
"Our federal RICO suit starts to ‘connect the dots’ of United’s and Oxford’s documented egregious and indefensible avoidance of their contractual obligations to their members and service providers, and their willful disregard of regulatory authorities and their pervasive noncompliance with statutes governing their activities in multiple jurisdictions and locales around the country."
. . .The Jamaica and Flushing suit accuses UHG, United and Oxford, together with the individual defendants of:
Wrongful denial of coverage, often after services have been provided to patients whose admission to the hospitals was approved by United and Oxford for their members, "in intentional and systemic violation of the Public Health Laws and Insurance Laws (and thereby breach their contracts with the hospitals) in order to reduce their financial responsibilities to hospitals and increase their own profits at the direct expense of the institutions."
This lawsuit is but the tip of the iceberg with UnitedHealth. Recently, UnitedHealth cancelled it's contract with Quest Diagnostics the largest medical testing laboratory in the United States, in favor of LabCorp.
This is a story unto itself. It involved UnitedHealth making demands of Quest which in all probability would have endangered patient safety. Allow me to give you a peek behind the curtain.
Here is an excerpt of a conference call between Wall Street analysts and the CEO and CFO of Quest. Let's take a listen.
Service failures and unreasonable demands?
This is from SURYA MOHAPATRA, PRESIDENT, CEO of QUEST DIAGNOSTICS.
As we look to 2007, we face challenges as a result of increased price competition and the loss of certain contracts. United healthcare and the PPO of horizon Blue Cross/Blue Shield of New Jersey. As you recall, we did not accept United Healthcare's [ highly accented], unreasonable demands and [highly accented] provisions. While it is unfortunate that we could not reach an agreement with United, this was the right long-term business for our company and our shareholders.
This is from BOB HAGEMANN, CFO, VP, of QUEST DIAGNOSTICS
Additionally, United has been aggressively communicating to its members that they will be faced higher co-pays and deductibles if they use an out of network lab. While these actions may cause a significant portion of the work to move to contracted labs, if there is a deterioration in the service levels that patients and physicians have become accustomed to, it's not clear how long those service failures will be tolerated.
More from SURTA MOHAPATRA. It starts to get scary around here when MOHAPATRA talks about quality.
SURYA MOHAPATRA: Thanks, Bob. A lab test is not a commodity, someone's's life depends on the results. Our job is to provide accurate and timely results to physicians and ensure that our patients are treated with care and compassion. We are in the medical business and our reputation is based on solid quality, convenience and innovation. That is how we distinguish ourselves every day.
And this. Irresponsible? When I hear irresponsible in the context of a health related matter, I think of only one thing, patient safety. What were the unreasonable demands UnitedHealth placed on Quest?
"In our response to UnitedHealthcare's request for proposals, we offered to substantially reduce its laboratory costs, while at the same time increasing access and convenience for its members and physicians," said Surya N. Mohapatra, Ph.D., Chairman and Chief Executive Officer. "Unfortunately, the terms and conditions that were offered by UnitedHealthcare would have been irresponsible for us to accept.
The UnitedHealth contract with Quest amounted to 7% of the gross revenue of Quest. It frightens me to think what Unitedhealth must have been demanding of Quest. What corners did they want Quest to cut? This is scary stuff. It's all about the bottom line. It has nothing in the world to do with your health or mine.
"UnitedHealth promised in their last investor day that they were going to get $300 million worth of medical cost savings over time," notes Sheryl Skolnick, senior vice president of CRT Capital group. "That comes from hospitals, physicians, labs -- you name it. This is just one step in that direction."
Okay folks, the saga continues. Doctors who persist in using Quest will face fines from UnitedHealth.
Doctors who deal with United Healthcare soon may be taking a financial hit if they send patients to an out-of-network lab.
In January, United, which has 2.1-million members in Florida and about 800,000 in the Tampa Bay area, ended its contract with Quest Diagnostics Inc., the giant Lyndhurst, N.J., lab company, and signed an exclusive national agreement with Laboratory Corp. of America Holdings of Burlington, N.C.
To enforce the change, the insurer has taken the unusual step of threatening doctors with a $50 fine if they refer United's members to Quest. The penalty takes effect March 1.
"I'm just flabbergasted," said Dr. Michael Wasylik, a Tampa orthopedic surgeon who heads the managed care committee for the Florida Medical Association. "I can't recollect hearing of anything like this in 10 years of handling managed care issues across the state. It's outrageous."
A congressional investigation of this predatory and deadly industry is long overdue. The criminal CEOs who run these companies need to be placed under oath, just like the Enron thieves and the CEOs of big tobacco a generation ago.
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