Aetna sues 9 N.J. doctors for "unconscionable" fees

Lawsuits claim that the out-of-network physicians charged as much as $50,000 for an inpatient consultation.

By Alicia Gallegos — Posted May 16, 2011

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Aetna Inc. has accused nine New Jersey doctors of charging excessive fees for out-of-network services. Four are countersuing, alleging that the insurer is guilty of fraudulent billing practices.

The lawsuits are the latest development in a debate among insurers and health care professionals over "usual, customary and reasonable" rates for out-of-network doctors.

Aetna sued the physicians between July and November 2010, claiming that they had charged "unconscionable" fees for services and threatened to balance-bill patients if not paid.

Cardiologist Benjamin Hannallah, MD, of Watchung, N.J., charged up to $48,980 for an inpatient consultation in 2009, an increase of more than $47,000 from his 2007 rate, according to one of the lawsuits. The average Medicare charge for an inpatient consultation is $358.12, according to 2010 data from the Centers for Medicare & Medicaid Services.

Cardiologist Karan Nejad, MD, of Hackensack, N.J., raised his fee for seeing critically ill hospital patients from $2,040 in 2007 to $15,000 in 2008, another lawsuit claims. The average charge for the first hour of a critical care visit is $520.76, according to CMS data.

Gynecologist-obstetrician Waleed Abdelghani, MD, of Hackensack, who assisted in two cesarean sections, allegedly charged $30,000 for each surgery, while in-network surgeons were paid about $2,000 for the same procedure, Aetna said. Standard pay for a surgeon assisting a C-section is $1,400, Aetna spokeswoman Cynthia Michener said.

"These were just outrageous bills," she said. "We are hoping to develop some case law here that there is such a thing as an outrageous fee."

The sued physicians treated patients at hospitals in Aetna's network. The patients had no knowledge they were being treated by out-of-network doctors, Michener said.

Attorneys for the doctors denied Aetna's allegations and maintained the fee rates were reasonable. Aetna has taken the charges out of context and made much of simple clerical errors, said Robert J. Conroy, attorney for Drs. Hannallah and Nejad.

"Their case is built on half-truths, innuendo and omissions of material facts," he said.

Aetna is attempting to establish regulations on out-of-network fees through the courts because of its failure to do so legislatively, said George Frino, attorney for interventional cardiologist Deepak Srinivasan, MD, of Hackensack, one of the defendants.

"[Dr. Srinivasan] was shocked and appalled that an insurance carrier would claim fraudulent billing activities when, for years, his invoices were processed in due course, and no complaint was ever made by Aetna," Frino said. "In our mind, this is a gross misuse and abuse of the judicial system."

Between November 2010 and March, four physicians, including Dr. Srinivasan, countersued Aetna. They allege deceptive billing practices and racketeering, among other claims. Aetna denies the allegations and has asked a judge to dismiss the suits.

Most out-of-network physicians practice fair billing, Michener said. Only a handful take financial advantage of hospital patients, she said.

Aetna plans to review similar billing patterns in other states to identify doctors who are potentially billing excessively.

"Some doctors who used to be in-network realized they could go out-of-network and raise fees because they had a captive patient base in the hospital," she said.

Billing system at odds

Insurers and physicians have fought in court elsewhere over acceptable UCR rates.

In 2000, the Litigation Center of the American Medical Association and State Medical Societies sued Aetna, UnitedHealth Group and several others over a database used to determine fees for out-of-network care. The Litigation Center said the system for years had been using flawed data to set the rates.

The suits triggered an investigation by Andrew Cuomo, then New York attorney general. In 2009, UnitedHealth Group reached a $350 million settlement.

As part of a separate settlement with Cuomo's office, large health insurers operating in New York agreed to stop using the data. None of the companies that settled admitted wrongdoing. Cases against Aetna, Cigna and WellPoint are pending.

Ingenix, a subsidiary of UnitedHealth Group, which sold the database at the center of the Cuomo agreements, is now known as OptumInsight.

A database created by FAIR Health, an independent nonprofit, was launched in January. Database officials expect to send payments based on the new figures to physicians by the summer.

American Medical Association President Cecil B. Wilson, MD, said the AMA supports more transparency in the out-of-network billing system.

"The AMA does not condone excessive fees for medical care and encourages physicians and patients to discuss costs before medical services are provided," he said.

Also named in Aetna's lawsuits are: internist Magdy Wahba, MD, of Paterson, N.J.; neurological surgeons, David Estin, MD, Jonathan Lustgarten, MD, and Ty James Olson, MD, all of Ridgewood, N.J.; and obstetrician-gynecologist Azer Alizade, MD, of Hackensack, N.J. Aetna also listed several "John Does" in the suits to allow for more defendants if their involvement later becomes clear.

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