N.Y. Hospital, Upset Over Claims Denials, Accuses HMO of Racketeering

April 20, 2007

A hospital network tired of having its bills challenged by HMOs has decided to play rough. Its members are suing two of the region’s largest health insurers, claiming each tried to weasel out of paying for millions of dollars in patient care.

In the latest suit, filed last week, the Brooklyn-based Brookdale University Hospital and Medical Center accused the 1.3 million-member Health Insurance Plan of Greater New York of engaging in an illegal conspiracy to routinely reject valid claims.

Brookdale’s chief executive, David Rosen, said the managed care company refused to pay for more than 1 of every 5 days its patients spent at the hospital last year. Often, those rejections were on the grounds that the treatment was not medically necessary.

The lawsuit said many of those denials were baseless, and it cited the example of one patient who spent 11 days at Brookdale after having surgery for a malignant brain tumor.

The gravely ill woman suffered from brain swelling and organ failure and was fed through a tube during her hospital stay. But, according to the lawsuit, the HMO ultimately refused to pay for her final eight days of care, saying “the patient was medically stable.”

Brookdale’s lawsuit said the HMO’s actions amount to civil racketeering, and cost the hospital at least $8 million.

Health Insurance Plan executives denied any wrongdoing, and issued a statement calling the federal suit “profoundly dishonest and defamatory” _ an effort by Brookdale to “distract attention from its own financial distress and possible mismanagement.”

“Brookdale believes that it should be free of any oversight or review and is willing to make baseless allegations to get its way,” the statement said. “HIP will resist these tactics and will not sacrifice requiring appropriate care simply because Brookdale wants to increase its revenue.”

The lawsuit is similar to one filed last spring by two of Brookdale’s sister hospitals in Queens against another big insurer, UnitedHealth Group Inc.

In that case, Jamaica Hospital Medical Center and Flushing Hospital Medical Center claimed they had been shortchanged by millions of dollars by UnitedHealth’s managed care subsidiary, Oxford Health. The suit said Oxford had promised to increase its payment rates to the hospitals after a contract negotiation, but continued to pay the old rates for more than a year.

The case, also filed in federal court in Brooklyn, is still pending. A UnitedHealth spokeswoman did not return phone messages Wednesday.

Rosen, who is the CEO of all three hospitals, said state regulators have not acted aggressively enough on industry malfeasance, leaving it up to medical centers to fight on their own.

“We’re saying, this can’t go on, and if I can’t get attention at the regulatory level, what am I supposed to do?” he said.

Brookdale’s new lawsuit also accused a group of doctors affiliated with a national health care company, Cogent Healthcare Inc., of secretly aiding Health Insurance Plan’s attempts to slash valid claims.

The suit said the doctors, who were brought to the hospital at the HMO’s request, were given incentives to write patient records in a way that would make it easier for the insurer to reject claims later.

Cogent said its doctors had nothing to do with HIP’s coverage or payment decisions. “We believe the accusations against us are without merit and we intend to defend our company vigorously,” said spokeswoman Anne S. Hancock.

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