Washington state physicians sue plans over business practices

The doctors become the latest in a growing number of groups to file grievances against managed care companies -- in this case, Regence BlueShield and Premera Blue Cross -- in state court.

By Tanya Albert, amednews staff. April 15, 2002.

Two groups of Washington physicians are turning to state court for relief from what they contend are health plans' unfair payment practices.

Their proposed class action lawsuits accuse the managed care companies of systematically bundling and downcoding CPT codes on legitimate physician claims. The two complaints also allege that the companies delay and deny claims in ways that violate Washington prompt-pay laws.

Cases at a glance
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"We believe we should be paid fairly and according to our contracts for the medical services we provide," said Cliff Robertson, MD, chief medical officer for Franciscan Medical Group in Pierce County, Wash.

The 72-physician group joined with seven orthopedic surgeons from Tacoma Orthopaedic Surgeons Inc. in March to file separate lawsuits, one against Regence BlueShield and the Regence Group and a second against Premera Blue Cross and PremeraFirst Inc. During pretrial hearings, a judge will rule on whether the cases will go forward as class action suits.

The complaints also claim that the companies breached contracts, violated the Washington Consumer Protection Act, breached the covenant of good faith and fair dealing, and broke state laws that prohibit criminal profiteering activity.

Dr. Robertson said that since the lawsuits were filed, numerous physician offices in the county and from across the state have called to say that they have experienced similar problems. "They are happy we were moving forward with a lawsuit," he said.

Unsuccessful talks

Doctors said they've tried to work with health plans to resolve problems outside the courtroom but that the talks haven't been successful.

"Physicians expect that when they sign contracts, that legitimate billings won't be bundled or downcoded, and we expect that claims for services are going to be paid promptly," said family physician Samuel Cullison, MD, president of the Washington State Medical Assn. "It's regrettable that physicians feel like the only recourse is suing health plans."

A spokesman for Regence BlueShield said plan officials are disappointed that a lawsuit was filed because company executives were trying to work with doctors.

"They are key to what we do," said the spokesman, Steve Eaton. CPT coding "is a complex system, and it's something we want to work with doctors on."

Eaton said the health plan recently had hired a physician ombudsman to deal with calls from doctors and created an advisory panel to work with physicians on their concerns.

Scott Forslund, Premera Blue Cross spokesman, said the company was reviewing the physicians' lawsuit. "It is a complex area, and our relationships with physicians are important to us," he said.

But the Washington health plans are not alone in facing physician court challenges of their business practices.

State court increasingly popular

Instead of going to federal court, where other lawsuits against HMOs are slowly winding their way through pretrial motions, the Washington physicians joined a growing number of groups that are heading to their state courts for some relief.

"Class certification tends to be simpler in state court," said Debra Hayes, one of the attorneys representing the physicians. If the suits are classified as class actions, about 22,000 Washington physicians could be affected by their outcomes.

Some of the other suits filed against managed care companies in state courts -- most of which were filed in 2001 -- include:

Kaiser v. CIGNA in Madison County, Ill. The suit accuses the health plan of bundling and downcoding CPT codes. A judge certified the lawsuit as a nationwide class action. That means several hundred thousand physicians have a stake in the case's outcome.
Collins et al. v. Anthem Health Plans Inc. in Waterbury, Conn. The court classified the suit as a state class action in which 7,000 physicians would have a claim. The complaint accuses Anthem of breach of contract, not acting in good faith, downcoding and violation of state unfair trade practices and insurance statutes.
Rogers et al. v. CIGNA Healthcare of Texas Inc. in Travis County, Texas. Nearly 30 Texas physicians filed the lawsuit claiming the health plan violated the state's Theft Liability Act by stealing their services. The physicians say they weren't paid for the care they provided.
The Medical Society of the State of New York filed separate lawsuits against six insurers in the state. The suits allege the companies breached contracts with physicians by arbitrarily denying medically necessary care and reducing and bundling claims.
The Connecticut State Medical Society filed separate complaints against six managed care plans in state court in New Haven. The complaints include allegations that the health plans arbitrarily overrule physician decisions, downcode CPT codes and breach contracts.

ADDITIONAL INFORMATION:

Cases at a glance

Franciscan Medical Group, Tacoma Orthopaedic Surgeons Inc. et al. v. Premera Blue Cross, PremeraFirst Inc. and Tacoma Orthopaedic Surgeons Inc., Franciscan Medical Group et al. v. Regence BlueShield, The Regence Group

Venue: Superior Court of the State of Washington for Pierce County
At issue: Whether the health plan bundled and downcoded claims and systematically delayed or denied paying legitimate claims, violating Washington prompt-payment laws.
Potential impact: Physicians hope the courts will help them recover money they say they are owed based on contracts they signed with the health plans.