Racketeering lawsuits become way to fight HMOs
Lawsuits use strategy of Big Tobacco fight
Disgruntled with managed care practices, more physicians are turning to the federal Racketeer Influenced and Corrupt Organizations Act (RICO) to sue HMOs when they feel they have been treated unfairly.
This trend toward physician-driven RICO lawsuits against managed care organizations has occurred even though "physicians are more conservative and less likely to jump into litigation" than beneficiaries, according to plaintiff’s lawyer Archie C. Lamb Jr., of the law offices of Archie C. Lamb Jr. in Birmingham, AL. Lamb is involved in physician-originated RICO lawsuits against insurers Cigna, Aetna, and Humana in the U.S. District Court for the Northern District of Alabama, and Blue Cross of California, PacifiCare Health Systems, and Foundation Health Systems in the U.S. District Court for the Northern District of California.
"There are a lot more cases around the country than ours," he notes.
Some providers don’t like the idea of using the RICO statues against health plans, preferring more traditional lawsuits.
"There’s a real split among medical society attorneys and lobbyists, with some supporting this type of litigation, feeling it might make the HMOs behave better, and some of us more skeptical," says Gordon H. Smith, executive vice president of the Maine Medical Association.
RICO complaints
According to the Alabama complaint filed by Lamb, "cost considerations and profits are routinely given priority over patient care" as health plans allegedly misrepresent their business practices to physicians and violate their promises of noninterference in medical care.
"This is an old HMO scheme," Lamb argues.
Mirroring what happened when private lawyers and state attorney generals went after Big Tobacco last May, the Judicial Panel on Multidistrict Litiga-tion issued a conditional transfer order moving the Alabama case to the Southern District of Florida for consolidated pretrial proceedings.
Humana opposed the transfer, arguing it could "lead to the potential and undesirable result of a consolidated proceeding involving all managed care litigation in the country, potentially involving some 150 million managed care patients and 83% of the nation’s physicians."
The Florida case tracks the Alabama complaint in that it maintains health plans provided inadequate payments, withheld payments, and threatened to withhold payments due for services provided.
Florida doctors say they turned to the RICO law as a last resort. "We’ve tried to work with the for-profit HMOs in the marketplace, and have attempted to curb the abuses through the legislative process — all to no avail," says Florida physician Marie Kuffner, MD. "We simply felt we could not continue to allow our patients’ health to be jeopardized by corporate greed."
Many legal experts say it is very hard for plaintiffs to win a RICO case in court. However, some of lawyers representing physicians in those cases admit the courtroom is not where they plan to win their case.
Instead, they intend to try the managed care industry in the court of public opinion, inundate it with lawsuits while putting pressure on Wall Street to force health plans to the bargaining table.
Points out Saul J. Morse, vice president and general counsel for the Illinois State Medical Society, "the benefit of litigation is that it makes people think about costs: Do we want to keep doing what we’re doing, or do we want to compromise?"
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