The state of Texas is suing Kaiser Permanente, alleging that the HMO giant illegally denies and delays payments for emergency care not provided within its network.
In the complaint, Texas Attorney General Dan Morales accuses Kaiser of failing to process claims within a reasonable time and refusing to pay claims without first conducting an investigation.
Morales is seeking compensation for patients' actual damages and loss of money or property, as well as civil penalties of up to $10,000 per violation.
Kaiser, in a statement, said it is "surprised and disappointed" at the state's action.
"We believe that our claims processing practices meet state laws and regulations, and we expect to win this case on its merits accordingly," the statement said.
The lawsuit, filed last week in state district court in Austin, accuses Kaiser of denying claims before even verifying that a patient was a Kaiser enrollee. The court documents also allege that a couple had to fight claims denials for six months, even though they had followed the instructions of a Kaiser nurse.
Kaiser denied the claim twice before realizing that, according to its files, a Kaiser employee had advised the parents to take the child to the nearest emergency room, the lawsuit said.
The lawsuit is deja vu for Kaiser. Morales alleged similar violations in a June 1994 complaint against the company, which was settled in March 1995.
That settlement required the company to hire a consultant to review claims made by Kaiser enrollees who were denied emergency-care coverage between 1992 and 1994. If the consultant overruled Kaiser's denial, the company had to pay the claim.
Under that 1995 settlement, Kaiser also agreed to revise its emergency claims review criteria.
"If Kaiser represents in marketing materials and in a legal settlement that it will fairly review a claim for emergency-care treatment, we expect the company to follow through," Morales said. "Our evidence suggests otherwise, and we intend to hold Kaiser accountable for its actions."
Kaiser said in its statement that it has cooperated fully with the attorney general's investigation and that "any valid concerns could readily have been addressed without resorting to this court action."
Kaiser, which has 123,000 enrollees in Texas, is selling its Southwest division to Las Vegas-based Sierra Health Services for $159 million.