This must be some kind of joke, Dr. Glennon Paul
thought as he read the missive from Health Alliance. In the letter, sent six years ago, Dr. Jon S. Rahman,
the health-maintenance organization’s chief medical officer, accused
Paul and two of his colleagues at Central Illinois Allergy and Respiratory
Services of receiving “overpayments” from Health Alliance and
providing inappropriate care to patients covered by the Urbana-based health
insurer. There was, Rahman wrote, a “pattern of excess charges”
from CIARS. In polite terms, Rahman was accusing Paul and his
partners of fraud, and Health Alliance wanted more than $2.1 million of its
money back. The letter sounded ominous, as if more trouble was brewing. “We consider this matter confidential and hope
it can be resolved in an amicable manner,” Rahman wrote, urging Paul
to get in touch immediately to discuss a payment plan. “We are,
though, bound to inquire further into the allegations concerning patient
care.”
After more than three decades as a physician,
Paul’s reputation and livelihood were at risk. Besides ripping off an
HMO, he and his colleagues were being accused of putting their financial
interests ahead of what was best for patients.
“I was kind of dumbfounded — I
didn’t believe it,” Paul recalls. “I thought,
‘Something’s wrong here.’ Then they called a few weeks
later and asked how much I was going to settle for.” At that point,
Paul realized, this wasn’t a misunderstanding that would just go
away. Even though he insists that he and his colleagues did
nothing wrong, Paul says that he offered to pay the HMO $50,000 to drop the
matter — it would be cheaper than hiring a lawyer. Health Alliance
said no, and so Paul decided to fight. A half-dozen years later, he’s
finally able to declare victory. But it wasn’t easy, nor was it
cheap. In the end, the HMO paid Paul and his colleagues, not
the other way around. But, really, only the lawyers won. The clinic spent
nearly $800,000 fighting Health Alliance, which spent more than $1 million
on attorneys and experts, according to an attorney for the respiratory
clinic. Had the money been spent on health care, many lives could have been
saved or prolonged — for instance, the legal expenses were enough to
cover lung-reduction surgery for more than 20 emphysema patients. But CIARS
had no choice. “Their practice was at stake,” says Mark
Smith, lawyer for Paul and his colleagues. “They put it all on the
line.”
In legal briefs, Smith accuses Health Alliance, which
partners with Springfield Clinic to run the HMO in the Springfield area, of
trying to put the respiratory clinic out of business with false claims of
fraud and inappropriate patient care. If the 30-year-old clinic had gone
down, there would have been more business for doctors at Springfield
Clinic, who compete with Paul and his colleagues. Health Alliance makes no apologies after a resounding
legal loss, and it flatly denies that its legal battle was based more on
the dynamics of the Springfield medical market than on bona fide fraud
claims. “Sometimes even good cases are lost,”
says Jane Hayes, a Health Alliance spokeswoman. But Paul says that this was all strictly business,
cutthroat to the core. “When I got this doggone lawsuit, I thought,
‘Doctors would never do this — it has to be
administrators,’ ” he says.
In business since 1975, Central Illinois Allergy
and Respiratory Services already had plenty of patients when it became part
of the Health Alliance network in 1995. The HMO, on the other hand,
didn’t have an allergist on its provider list in the Springfield
area, Paul and his colleagues say. “They needed us — we did not need
them,” says Dr. Donald Gumprecht, who joined the clinic in 1990.
“My counsel to Dr. Paul was ‘Don’t join any HMOs.
It’s not worth the headaches.’ We’re honest physicians
who just want to be left alone. If we do a good job, our patients are going
to find their way to us.”
But Paul, as head of the clinic, didn’t listen.
“We were just babes in the woods,” he says. “It was just
another way to practice medicine. We had no idea this crap was going to
happen.”
The clinic, located near Memorial Medical Center on
Miller Street, includes a half-dozen physicians and has its own laboratory
and X-ray department, so patients who might otherwise go elsewhere for
blood tests and X-rays can be evaluated and treated in-house. A single
doctor can act as a patient’s primary care physician, pulmonologist,
and allergist. Furthermore, the doctors say, their average patient
isn’t insurable, except through employer-provided plans, as a result
of chronic respiratory illness — their patients are sick enough that
they’d be rejected if they tried to buy insurance on their own. The
array of in-house services and the severity of their patients’
conditions may add up to higher-than-average charges in the complicated
matrix of HMO cost-control analyses, the physicians say, but the bottom
line is, they save insurers money by not referring patients to outside
specialists or hospitalizing them for treatments that can be provided in
the clinic.
Before signing a contract, the doctors say, they made
it clear to Health Alliance that they often charged more than other
physicians for patient visits and that they would not change their ways to
suit the HMO. Paul gave a top Health Alliance administrator a tour of the
clinic to show him rooms where patients received intravenous treatments
that are typically administered in hospitals. “If Health Alliance did
not like what it was told, it should have chosen not to proceed,”
Smith, their lawyer, writes in a legal brief. “But instead, Health
Alliance, along with Springfield Clinic . . . chose to move forward.”
Springfield Clinic is closely tied to Health
Alliance, which keeps 15 percent of the premiums collected from
Springfield-area members of the HMO to pay administrative costs. The
remaining 85 percent is split between Springfield Clinic and Memorial
Medical Center. All treatment costs must be paid from the 85 percent that
remains after Health Alliance takes its cut. If health-care providers got
paid more than that, then Springfield Clinic took a loss. If the total
amount spent on patients was less than 85 percent of premiums collected,
Springfield Clinic made a profit. In short, Springfield Clinic bore the
financial risk — Health Alliance would collect its 15 percent of
premiums no matter what. “Anything they’re paying to us is a
true loss [to Springfield Clinic],” Gumprecht says.
Perhaps that explains why Mark Kuhn, a top
administrator for Springfield Clinic, attended the eight-day arbitration hearing during
which the dispute was ultimately resolved. Gumprecht and Paul say that no
Health Alliance employee observed the proceedings for any appreciable
amount of time. Kuhn was also in charge of determining the amount that
Health Alliance claimed that Paul and his colleagues had overcharged for
services, the HMO acknowledges in legal briefs outlining how its case was
prepared. No one directly involved in the case on Health
Alliance’s side is eager to talk. Kuhn declined comment. “I
couldn’t really offer any good input,” he says. “You
should talk to someone with Health Alliance.” David Bennett, one of
Health Alliance’s lawyers, denies that the HMO was trying to limit
competition, but he refuses to answer most other questions, saying
that’s a job for a Health Alliance spokesperson.
Bennett questions the public’s right to know
about the case, even though Health Alliance is the biggest HMO in the
Springfield area and its members presumably have an interest in knowing
whether their insurer is providing cost-effective health coverage. “This is a private proceeding,” Bennett
answered when Illinois Times asked questions about the case. “Where do you get this
information?”
In legal briefs, Health Alliance argues that its
contractual relationship with Springfield Clinic is irrelevant. “We
would not pursue legal action to reduce medical competition in any market
— this was purely a quality-of-care issue,” says Hayes, the
Health Alliance spokeswoman. As for why Kuhn, rather than a Health Alliance
employee, observed the arbitration proceedings, Hayes answers, “I
believe he was there because we have a very close relationship with
Springfield Clinic.” From the very beginning, Health Alliance says, it lost
money in its dealings with the respiratory clinic. In legal filings, the
HMO says that the amount it paid Paul and his colleagues nearly tripled
between 1995 and 1999. At the same time, the HMO says, its losses on CIARS
patients climbed from $227,816 to nearly $1.2 million.
Over the years, Health Alliance occasionally
questioned charges, the doctors say. Each time, they sent letters to Health
Alliance explaining their charges and heard nothing back. “When they
ignored these letters, I assumed they thought I was golden,” says
Gumprecht, who
still has copies of correspondence that ended up as exhibits when the HMO
sued. “There is no question that through either intentional acts or
reckless disregard for the truth, Health Alliance and Springfield Clinic
lulled the Respondents into a false sense of security, only to make them
victims of what was a deliberate fraud aimed at removing them as a
competitor in the region,” Smith writes in a legal missive. Once Springfield Clinic recruited other allergists
and pulmonologists who could care for the HMO members, Health Alliance made
its demand: Pay up or else. “They wanted to know what we were going
to do,” Paul recalls. “I told them we were going to get an
attorney.”
After Health Alliance sued, auditors from Medicare,
Blue Cross, United Healthcare and state public aid combed through the
clinic’s records, looking for overcharges and examples of improper
treatment. “I got four audits within six months,” Paul says.
“I never was audited before. What’s going on here? Do you
believe in coincidences?”
The other insurers found nothing serious. They
demanded no refunds and kept doing business with the clinic. Health
Alliance, however, pressed on, claiming that the clinic’s doctors had
overbilled for office visits, administered unnecessary flu shots, taken
sinus X-rays that weren’t needed, performed inappropriate laboratory
tests, and subjected patients to IV treatments with steroids and other
substances that weren’t necessary. “Respondents ran a medical
‘mill’ and ran patients through, giving them the ‘full
treatment’ in circumstances where the procedures were not
warranted,” Health Alliance lawyers wrote in one legal brief. The
lawyers labeled some of the treatments “potentially dangerous.”
Had any of the allegations been upheld, Paul says, he
and his colleagues could have been ruined. Every insurer, he says,
routinely asks whether a doctor has been found guilty of overbilling or
providing inappropriate treatment, and no one wants to deal with a crook.
“If we had to pay it back, we’d be in trouble with the 38 or 40
other insurers we do business with,” Paul says. “We had to
win.”
The clinic lost the first round, a request to have
the dispute decided by a judge or jury in Sangamon County Circuit Court.
Under the terms of the clinic’s contract with Health Alliance, the
matter had to go before an arbitration panel consisting of three lawyers.
It was a one-shot deal: Whatever decision arbitrators reached could not be
appealed. Time and again, Paul refused settlement offers. “They
picked a fight with the wrong guy,” Smith says. “The writing
was on the wall very early with him: He was determined to vindicate himself
and his partners and his practice. He dug his heels in and said, ‘I
believe in the way I treat my patients.’ They [Health Alliance]
wanted to settle the case all along. One of their constant refrains was, we
were making too big of a deal out of it, this is supposed to be
arbitration, we’re supposed to be saving time and money.”
Health Alliance eventually lowered its demand from
more than $2.1 million to nearly $1.4 million. At one point, Paul says,
Health Alliance offered to settle for $1.9 million, which included some of
the HMO’s legal costs. To make its case, Health Alliance retained a
statistician and three doctors, who examined 100 charts and extrapolated
conclusions about the 2,256 HMO members who received services from the
clinic. Health Alliance used bellshaped curves and averages to calculate
damages. Trouble was, Paul says, the 100 patients in the
Health Alliance sample were among the clinic’s sickest customers. To
prove the HMO wrong, Paul personally combed through charts and billing
records covering more than 100,000 patient visits. “We didn’t
have a business manager,” he says. “We had to do everything
ourselves.” Paul estimates that he worked between 10 and 20 hours a
week for three years. “He went all-out,” Smith says. “We
had boxes and boxes of medical charts — I’ve never seen so much
paper. He wanted to show the arbitrators the truth, why the clinic’s
approach makes sense and why they do what they do.”
He succeeded. Nearly a year ago, the arbitration
panel unanimously ruled in the respiratory clinic’s favor and also
granted a counterclaim, awarding Paul and his colleagues nearly $76,000
that the panel ruled the HMO had wrongly withheld as payments for services.
The icing on the case came two weeks ago, when arbitrators awarded the
respiratory clinic $535,000 in legal fees. “They made us as whole as
they could make us,” Paul says. Despite the legal ordeal, Paul and his partners
remain steadfast. “You cannot be influenced by the insurance
companies on what kind of care to give,” Paul says. “You have
to do it, or otherwise someone’s going to get hurt.”
This article appears in Jan 5-11, 2006.
