Conn. Health Management Firm Repays Alleged Rebates; No Fines

April 24, 2006

An Avon, Conn. obstetrician and gynecologist management company subpoenaed last June for allegedly accepting illegal insurance rebates will repay $198,000 to its clients to settle the case, according to state Attorney General Richard Blumenthal.

The group, however, insists that its receipt of the funds was not a violation of the intent of the state’s anti-rebating law.

According to Blumenthal, Women’s Health USA Inc. three times between 1998 and 2002 accepted funds from an insurer and broker Hilb Rogal & Hobbs as part of transactions in the purchase of medical liability coverage for a group of doctors, Physicians for Women’s Health. These payments to WHUSA were passed along in the premiums charged to the doctors. Under Connecticut law it is illegal for brokers to pay clients or share commissions to secure their business, a practice called rebating.

Women’s Health USA, while agreeing to return the rebate monies to its client PWH, maintains that the funds were payment for risk management services it provided PWH and not rebates or kickbacks for steering business as prohibited by law.

“In all cases, the doctors of Physicians for Women’s Health, WHUSA’s client, themselves chose the insurers and brokers and negotiated their own premiums, not WHUSA. WHUSA was asked by the doctors to seek payments from these insurers and brokers to help pay for risk management services which the doctors needed and WHUSA would provide. Those services help to lower insurance costs and avoid bad outcomes for patients,” the group said in a statemnt. “As the Attorney General points out, WHUSA did deliver real risk management services using these funds. The anti-rebate statute he asserts was violated was intended to prevent brokers or others from exacting rebates from carriers for skewing the placement of insurance. That did not happen here. The physicians chose the carriers and brokers and WHUSA would have sought these funds from any such party they had chosen.

“At worst, this was an unintentional technical violation of an ambiguous statute. No one was harmed or deceived. And apparently there would have been no violation if the funds had simply flowed another way — in the form of lower premiums to PWH which could then have used the savings to pay WHUSA for the risk management services it provided,” WHUSA said.

The group noted that it would return the fees it received but is not being required to pay any fines.

Hilb Rogal & Hobbs agreed in August 2005 to a $30 million in August 2005 to a $30 million settlement over allegations it steered clients to preferred insurance companies.

WHUSA sad it hopes lawmakers would consider revising the anti-rebate law to permit an insured and its agents to directly seek payments for risk management services from their insurance carriers.

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