New York doctors settle suit over Blues underpayments

Thousands of physicians in New York and Pennsylvania recently won some relief in their payment disputes with the Blues plans in their states.

In New York, Excellus BlueCross BlueShield in December 2006 agreed to pay $29 million to Rochester Community Individual Practice Assn. to settle the doctors' claims that the insurer had shortchanged them on fees.

Neither side admitted any wrongdoing in the agreement, which ends an eight-year battle. The funds will be divided among 2,600 of RCIPA's physician members beginning in March.

The settlement comes on the heels of RCIPA victories over Excellus in 2001 and 2003. The physicians won $4 million and $19 million court judgments respectively, in separate claims alleging similar reimbursement contract breaches.

In a joint announcement by the two parties, RCIPA Chair Stephen M. Rauh, MD, praised the most recent resolution, which was designed "in a way that is fair to the RCIPA providers and that we hope will enhance the relationship for both sides."

Scott Ellsworth, Rochester regional president for Excellus, said in the joint statement, "This [RCIPA] settlement, the settlement of the [Medical Society of the State of New York] case last year, our financial support for the physician work force study and our initiatives to increase physician compensation ... are all examples of our willingness to partner with physicians." Both sides said the agreement prohibited them from commenting beyond the press release.

Donald Moy, MSSNY general counsel, called the agreement a positive step toward collaboration but said physicians continue to experience problems.

MSSNY was not involved in RCIPA's lawsuit. But in May 2005, Excellus agreed to settle the medical society's 2001 class-action lawsuit accusing the insurer of arbitrarily denying and downcoding doctors' payment claims. In that settlement, Excellus, which did not admit any wrongdoing, agreed to pay doctors $5.5 million and spend another $50 million to improve its billing procedures.

"We continue to monitor the settlement to work out areas where there are problems, and we are cooperating," Moy said. He added that the agreement had improved relations. For example, a physician advisory committee and other public health initiatives have been established.

Meanwhile, a federal judge in Pennsylvania granted class-action status to a doctors' lawsuit alleging that Keystone Health Plan Central used fraudulent payment practices.

The suit, filed in 2001 on behalf of Natalie M. Grider, MD, and her practice group, Kutztown Family Medicine, accuses the Blue Cross-operated plan of systematically bundling and downcoding doctors' reimbursement claims, in violation of the federal Racketeer Influenced and Corrupt Organizations Act.

The court also gave class-action status to doctors' claims that Keystone had failed to pay them on time, in violation of Pennsylvania's prompt-pay law.

Kutztown Family Medicine declined to comment on the ruling, and the doctors' attorneys did not return calls for comment. Joseph Butera, a spokesman for Capital BlueCross, which runs Keystone, said the company denies any wrongdoing.

The case mirrors class-action lawsuits filed nationwide against other insurers; these cases were consolidated in the U.S. District Court in the Southern District of Florida.

In July 2006 the judge dismissed the last remaining defendants in the case, United Healthcare and Coventry Health Care. The other HMOs that were sued previously had settled with physicians.