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Queens Chronicle

Hospitals Sue Groups For Health Racketeering

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Posted: Thursday, February 8, 2007 12:00 am

United Health Group, its United HealthCare and Oxford subsidiaries and several United and Oxford executives, including former United CEO William Maguire, are accused of violating the U.S. Racketeer Influenced and Corrupt Organizations Act in a law suit filed Tuesday in the U.S. District Court, Eastern District of New York, by Jamaica Hospital Medical Center and Flushing Hospital Medical Center.

The hospitals, in their RICO suit, accuse United Health Group and United HealthCare and other subsidiaries of implementing a “rogue business plan” on a “national level” that, for more than three years, “has contributed to UHG’s profits, which, in turn, have been utilized in attempts to justify outlandish compensation to Maguire and to enhance the value of illegally backdated options for UHG stock” which were given to Maguire, other UHG senior executives and to managers of its business units.

These included “the individual defendants who controlled the operation of the Insurer HMO Enterprise to encourage the generation of excess profits by any means — including the violation of New York laws, violation of their contracts with service providers such as plaintiffs, and even the violation of their duties to their members.

David Rosen, president and CEO of both hospitals, said: “UHG, United and Oxford have clearly established and refined a pattern of deceitful practices and myriad means to improperly retain money they owe to service providers, and to arbitrarily and unjustifiably deny payment for their members’ medical services under their plans.

“Our federal RICO suit starts to ‘connect the dots’ of United’s and Oxford’s documented egregious and indefensible avoidance of their contractual obligations to their members and service providers, and their willful disregard of regulatory authorities and their pervasive noncompliance with statutes governing their activities in multiple jurisdictions and locales around the country.”

The Jamaica and Flushing suit accuses UHG, United and Oxford, together with the individual defendants of:

Wrongful denial of coverage, often after services have been provided to patients whose admission to the hospitals was approved by United and Oxford for their members, “in intentional and systemic violation of the Public Health Laws and Insurance Laws (and thereby breach their contracts with the hospitals) in order to reduce their financial responsibilities to hospitals and increase their own profits at the direct expense of the institutions.”

By backdating its contract with Jamaica, (which they subsequently admitted in a sworn statement) fraudulently requiring Jamaica Hospital to remain in the United/Oxford network at the time Jamaica Hospital attempted to remove itself from the Oxford network.

Using economic pressure that Oxford fraudulently created to coerce Jamaica Hospital and Flushing Hospital to “strong arm” a group of anesthesiologist who practiced at Flushing Hospital to join the Oxford network.

Wrongful denial of coverage at Flushing Hospital by falsely telling their members that Flushing Hospital was “not a network provider,” thus, “allocating a greater share of the costs of the medical services as the patients’ responsibility.”

The suit also accuses UHG and Oxford of fraud, breach of contract and unjust enrichment. “The defendants’ fraudulent business plan relied on their size to overwhelm the New York State Department of Health and numerous other regulatory agencies across the United States, using the claimed ‘complexity’ of their computer systems to excuse and camouflage the purpose of their repeated violations of law, while at the same time committing thousands of ‘little frauds’ against their members, health care consumers and their service providers,” said Michael Brown, attorney for Jamaica Hospital and Flushing Hospital.

The Attorney General of the State of New York, in a recent “consent decree,” concluded that United Health Care of New York had committed both “fraudulent business practices” and “deceptive business practices” in providing inaccurate information about the network status of approximately 141 participating providers. These acts either improperly shift to the health insurer’s members financial obligations properly belonging to the insurer or to deprive service providers of payment for services properly rendered.

The New York State Department of Health suspended United’s Certificate of Authority to do business in New York for certain important lines of business for repeated citations by Health Department over just an 18 month period for providing inaccurate information concerning the network status of service providers.

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