New York doctors sue health plan over "all products" policy

Physicians say that the requirement tying them into two networks is not only illegal but bad for patient care.

By Amy Lynn Sorrel — Posted Oct. 16, 2006

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New York doctors filed a class-action lawsuit to fight a "take it or leave it" policy that Oxford Health Plans and UnitedHealthcare mandated. Doctors accuse the plans of illegally coercing them to participate in their networks.

The lawsuit underscores doctors' growing concerns about the burden such restrictions place on patient care. Physicians say that health plan mergers are reducing choices for patients and create unfair business practices for doctors.

UnitedHealthcare and Oxford merged in July 2004 and last year told New York doctors that if they wanted to stay in, or join, one of the networks, they had to be in both. If doctors did not agree, their contracts would be cancelled under what is known as an "all-products" requirement.

The Medical Society of the State of New York and 11 individual doctors allege that the rules violate state antitrust laws by illegally tying the two plans together and forcing doctors to contract with an inferior plan that imposes low reimbursement rates or inadequate coverage of services. If they don't accept the terms, doctors say they risk losing a number of patients, whose care also will be disrupted if their doctors are dropped and they have to find another doctor.

The health plans "are using their economic clout in one product to force doctors to take a product that they otherwise would not if it weren't for that market power," said Donald Moy, MSSNY general counsel.

The lawsuit filed on Sept. 14 in a Manhattan trial court also alleges that UnitedHealthcare and Oxford are breaching their contracts with doctors by imposing the new requirement and infringing on the physician-patient relationship.

Plastic surgeon Scot B. Glasberg, MD, one of the plaintiffs, said that before the merger, he had a history of payment issues with United and moved over to Oxford. When the two plans integrated, he asked to remain only in Oxford but was denied.

"I even offered to see my Oxford patients out-of-network for part payment, and they still refused," Dr. Glasberg said, so he dropped out.

He said his patients received letters from the health plans stating that they could no longer see him, although they could continue to do so on an out-of-network basis, Dr. Glasberg added.

"What these insurance companies are engaging in is basically fraudulent practices," he said. "For a breast cancer [reconstruction] patient to have added concerns about insurance payments is not healthy," he said.

UnitedHealthcare and Oxford spokeswoman Maria Gordon-Shydlo declined to comment on the lawsuit.

She said that about 90% of doctors in the separate networks already participated in both the Oxford and UnitedHealthcare plans before the merger. As a result of the new requirement, Oxford gained 3,800 doctors and United added 6,600. Fewer than 1% of the health plans' 66,000 total physicians dropped out, she said.

"One of the values was giving our members access to a broader network," Gordon-Shydlo said.

American Medical Association policy opposes tying a physician's membership in a managed care panel to that physician's participation in any other managed care panel.

The AMA says legislative action is needed to prohibit these health plan requirements.

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