A pain-management provider filed a multimillion-dollar suit against 21 of California's largest workers' compensation insurers, charging they conspired to refuse and delay payments.
The plaintiff, the National Pain Institute of Marina del Rey, Calif., alleges late and refused payments drove it out of the workers' compensation business in California, costing its parent, Allegiant Physician Services, $123 million.
Allegiant, based in Atlanta, owns 97% of NPI stock.
The suit, filed Jan. 6 in Los Angeles Superior Court, seeks $123 million in actual damages, plus punitive damages.
Defendants include the State Compensation Insurance Fund, Fremont Compensation Insurance Co. and Liberty Mutual Insurance Co.
Many of the same insurers are defendants in a similar, $115 million suit filed in November 1993 by Irvine, Calif.-based Tricare, which owns occupational medical clinics. Tricare also charges that insurers conspired to delay payment and drive the clinics out of business.
Joseph G. Bleser, executive vice president and chief financial officer at Allegiant, told MODERN HEALTHCARE that insurers have "gone to extremes" in an environment where new workers' compensation laws target fraudulent providers. Insurers' actions have damaged legitimate clinics, he said.
"We're not one of the quirky, kinky ones," Bleser said.
NPI's pullout from workers' compensation caused Allegiant to take a $24 million charge to its operating results during the fourth quarter of 1993, Allegiant said.
Clifford Sweet, an attorney for Superior National Insurance Co., a defendant, called the charges "ridiculous." Workers' compensation providers "are given a special remedy not available to any other biller in the medical industry," which NPI has not sought, he said.
Under the law, a provider who is not paid within 60 days can go before the Workers Compensation Appeals Board and seek payment plus a 10% penalty. The reform legislation took effect in 1993.
Providers that do not "make their living by trying to attract large numbers of workers' comp patients continue to profit and flourish," Sweet said.