PacifiCare ordered to pay $6.9 million to bankrupt IPA

Despite the ruling, it's still unclear if doctors awaiting payment from Heritage Southwest Medical Group will ever see the money they're owed.

By Robert Kazel, AMNews staff. Oct. 11, 2004.

Physicians who have waited years to receive compensation from a now-defunct Dallas IPA could have a better shot of at least seeing some of that money because of an arbitrator's decision that PacifiCare Health Systems owes the IPA about $7 million.

Heritage Southwest Medical Group Inc., forced into bankruptcy three years ago and caught up in protracted litigation ever since, was told by the arbitrator that it's entitled to the money from PacifiCare in part because the Cypress, Calif.-based insurer improperly terminated its contract with Heritage before it began negotiating separate contracts with many of the IPA's 700 doctors in 2001.

In August, a Texas arbitrator said PacifiCare owed Heritage $6.9 million, ruling that PacifiCare didn't give Heritage the required 120 days notice before ending the contract.

The arbitrator also determined that the IPA was misled by PacifiCare because Heritage didn't have enough information on profit potential or how capitation rates were determined, said Devan Beck, an attorney for the IPA.

A PacifiCare spokesman declined to comment, saying the matter is still being litigated.

In 1998, Heritage had signed a contract with PacifiCare for its primary doctors, specialists and hospitals to treat the managed care company's HMO members in the Dallas-Ft. Worth area.

Within two years, many delays reportedly occurred in the payment of monthly capitated fees from the IPA to doctors, causing a local health plan, two medical groups and three physicians to sue Heritage in an attempt to hasten payment.