Managed Care Lawsuit Watch - March 2004

This summary of key lawsuits affecting managed care is provided by the Health Care Law Group of Crowell & Moring LLP. If you have questions or need assistance on managed care law matters, please contact any member of the health law group.

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Cases in this issue:

• Kroning v. Resurrection Health Care
• N.C. Medical Society v. BlueCross and BlueShield of North Carolina

Kroning v. Resurrection Health Care N.D. Ill. No. 02C6973 (2/23/04)

The Northern District of Illinois granted summary judgment in favor of Resurrection Health Care, a plan sponsor, on the grounds that the plaintiff had not exhausted administrative remedies prior to filing suit in which she alleged that Resurrection's claims administrator for mental health claims, Accord Behavioral Health, denied pre-certification for her son's treatment. The plaintiff argued that she thought she had filed an appeal given her numerous conversations with one of the plan's benefits assistants who told the plaintiff that she would "take care of it." Plaintiff further alleged that she was unable to deal directly with the plan administrator because he was unreachable and unhelpful. The plan contended, however, that it invited the plaintiff to file an appeal but she never did. The Court found that the plaintiff had not filed an appeal requesting review and, therefore, no denial of benefits based on an appeal had been issued by Resurrection. Although it granted summary judgment in favor of the plan, the court instructed the plan to handle the appeal on an expedited basis and to act in accordance with the representations it had made during the proceeding and review the plaintiff's appeal with "fresh eyes and a fair mind." The proceedings were also stayed while the plaintiff filed an administrative appeal with Resurrection.

N.C. Medical Society v. BlueCross and BlueShield of North Carolina N.C. Super. Ct. No. 04-CVS-78 (01/05/2004)

The North Carolina Medical Society ("NCMS") filed a lawsuit against BlueCross and BlueShield of North Carolina in state court in Raleigh, alleging that the defendant HMO intentionally engages in unfair and deceptive trade practices, and seeking injunctive relief to force the HMO to change its business practices. The lawsuit does not seek money damages.

NCMS alleges that BlueCross and Blue Shield of North Carolina deliberately engages in trade practices which are "designed to delay, deny, impede, and reduce lawful reimbursement" to physicians participating in their network, which includes more than 500,000 state employees, teachers, and retirees. The allegations range from failure to employ sufficient staff to handle NCMS member's inquiries to allegations of "routinely and unjustifiably reducing retroactively the amount of reimbursement remitted to NCMS members, referred to as 'downcoding.'"

In a press release, Bob Greczyn, President of BlueCross and BlueShield of North Carolina, called the lawsuit an attempt by physicians to make financial gains for doctors and class-action lawyers, and not an attempt to improve patient care. BlueCross and BlueShield pledged to "vigorously defend" its business practices.

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