When John Sutter, M.D., filed a lawsuit against five New Jersey managed care plans in April, he added to what has become a mountain of litigation from doctors across the country who are seeking to radically change the way health plans deal with physicians' claims.
Though the Clifton, N.J., pediatrician and scores of other plaintiffs are angry about claims processing techniques that cut their pay, many say they have a higher aim. Sutter, who filed his case in state court under New Jersey's consumer fraud law, says he wants to work as an equal partner with health plans to create a new, more rational managed care system.
"My interest is in improving managed care to make it more cost-efficient," Sutter says. And he has moved in that direction himself by switching his office to electronic billing.
But to get to this higher plane, Sutter and many other plaintiffs think they need to place a giant hammer over managed care organizations in the form of lawsuits--many of which will seek tens of millions of dollars in damages.
Filed by physicians and medical societies in state and federal courts, these actions seek to stop such health plan practices as downcoding, bundling and denying payments.
The plaintiffs also want to stop plans from using their market clout to force doctors to accept standard contracts, as well as get them to divulge payment
Sutter says claims processing can be more efficient if both sides can agree on the rules governing it. Health plans are putting up stiff legal resistance.
"We do not believe that the courts are the place to resolve these kinds of issues," says Susan Pisano, spokesperson for the American Association of Health Plans. "You can't sue your way to better health care."
The physicians' attorneys say it may take a year or more for the first cases to come to trial.
Meanwhile, plaintiffs have scored modest victories in pretrial skirmishes. Two lawsuits in Illinois and Connecticut have won class action status in state courts. This is crucial, says William Sweeney, attorney for Edward Collins, M.D., of Willimantic, Conn. The orthopedic surgeon is suing Indianapolis-based Anthem in his home state.
While a suit brought by one physician is a minor threat to a plan, Sweeney says his class action on behalf of 7,000 Connecticut doctors packs a large potential payment.
"When you multiply anything by 7,000, it's a big number," he says, noting that an award of just $5,000 per doctor means $35 million in total damages.
In March, plaintiffs had another pretrial success. A federal appeals court in Atlanta cleared the way for six lawsuits that are based on the federal Racketeering Influenced and Corrupt Organizations Act, better known as RICO.
Plans are appealing those cases.
Using RICO, individual physicians and the medical societies of California, Texas, Florida and Georgia allege that plans used fear and the threat of economic loss to force physicians to limit medical care. Plans that lose a RICO case risk having to pay treble damages.
In April, the Tennessee and South Carolina medical societies filed cases in state courts, following legal arguments in cases filed by the Connecticut and New York medical societies. Four other state societies, not yet named, are planning to file similar lawsuits, according to Tim Norbeck, executive director of the Connecticut State Medical Society.
To track all the lawsuits and swap information, the AMA and medical societies have formed a litigation center that can be accessed from the AMA Web site. The AMA also has become a co-plaintiff in several lawsuits, says AMA Secretary-Treasurer Donald Palmisano, M.D.
The suits face a long battle because "the insurance companies have all these escape routes," Palmisano says, referring to a complex legal thicket afforded by the federal Employee Retirement and Income Security Act.
Seeking partnership with plans
Donald Timmerman, M.D., past president of the Connecticut State Medical Society, confesses that he feels a little squeamish about filing lawsuits at a time when the profession feels increasingly battered by malpractice litigation.
It's a criticism the health plans constantly bring up. But Timmerman says physicians have no other choice because nothing else has worked, not even the managed care reform laws passed in most states in the late 1990s.
The society is "not looking for big bucks in these suits," Timmerman says, but simply wants injunctive relief to stop the plans from carrying out undesirable practices. Doctors also are looking for "dignity and a chance of becoming an active participant in this country's healthcare system."
Timmerman is optimistic about the outcome. "There are wonderful things that could happen in a partnership instead of this adversarial legal war that goes on between both sides," he says. In return for concessions from health plans, he believes physicians would commit themselves to "embracing clinical guidelines, collecting data and changing physician behavior."
Pisano of the AAHP says plans already work with physicians to discuss payment issues. In April, the AAHP hosted an audio conference on improving claims processing in conjunction with the Medical Group Management Association and a coalition of specialty societies, including the American College of Physicians-American Society of Internal Medicine and the American Academy of Family Physicians.
"The assumption (of the lawsuits) is that all responsibility for claim processing only resides with the health plans," Pisano says. "We think claims processing problems are a series of interconnected events between health plans and physicians' offices."
The AMA's Palmisano is unimpressed with the efforts of health plans to work with doctors. "Health insurers should address the legitimate concerns of physicians with more than mere rhetoric."
Many doctors say they have tried discussions with plans to no avail. Two years of meetings between the Pennsylvania Psychiatric Society and Magellan Behavioral Health, based in Columbia, Md., were "extraordinarily frustrating," says society President Kenneth Certa, M.D. "Each time we met with a different group of people."
In 1999, the society filed lawsuits against Magellan and other behavioral health companies. In lengthy debates leading up to filing, Certa says some members were concerned about the expense and length of litigation, as well as whether differences with managed care were too great to be bridged in settlement
agreements with the plans.
But they voted to litigate. "We didn't have much choice," he says.