Tennessee Doctors Sue HMOs

Alleging HMOs have created “shell games that avoid their contractual obligations,” the Tennessee Medical Association (TMA) is suing Aetna, BlueCross BlueShield of Tennessee, CIGNA, and UnitedHealthcare, charging them with unfair and deceptive business practices.

Several lawsuits were filed April 25, 2002, in Davidson County Chancery Court that allege because of the “extraordinary unequal bargaining positions” between the TMA and HMOs, the TMA’s 6,600 members are forced into one-sided contracts that ultimately “impede good medicine.”

According to TMA President Dr. David K. Garriott, the association “regrets that we have been forced to go to court to improve the managed care environment that has become unmanageable for so many of our members and patients.”

The lawsuits, which seek class-action status, say these unfair business practices include:

• Arbitrarily denying claims for “medically necessary” care without adequate justification or explanation.

• Reducing a physician’s payment for medically necessary care by “down-coding”—changing 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.

• Bundling claims—issuing a single payment for a group of related medical services, rather than paying for each service individually.

• Improperly reviewing claims by using computerized programs to automatically deny or reduce claims by “down-coding.”

• Failing to pay claims on time.

A spokesperson for UnitedHealthcare says the insurer cannot comment because the company has not yet been served with the lawsuit. According to CIGNA, the HMO “makes every effort to pay claims promptly and accurately” on behalf of its plan participants. Aetna officials were “surprised and disappointed” to learn of the lawsuit because the insurer has “a good relationship with doctors in Tennessee.”

Telephone calls seeking comment from BlueCross BlueShield of Tennessee were not immediately returned.

New State, Same Charges

Tennessee joins a growing number of states with medical associations that have filed lawsuits to take HMOs to task for secretive business practices the doctors claim are abusive and “allow insurers to avoid their obligation to pay for care provided to patients.”

The TMA has retained class-action litigation giant Milberg, Weiss, Bershad, Hynes & Lerach to help local lawyers prepare the case. The attorneys are working with medical associations in Connecticut, South Carolina, and New York that have brought lawsuits against many of the same HMOs and leveled virtually identical charges.

Vicki Lankarge writes for insure.com, the Consumer Insurance Guide.