AMA Wins Victory Over Fraudulent Insurance Practices

We often hear debates about the high cost of health care in America, and the allegation is sometimes made that trial lawyers filing “frivolous lawsuits” are responsible for driving up health care costs. We have discussed elsewhere on this blog how, in fact, as many as 45 cents out of every dollar spent in the U.S. health care system is spent dealing with avoidable medical errors. Another issue that compounds healthcare costs in America is the lack of regulation of the health insurance industry. Now trial lawyers have helped get $350 million back to physicians and patients, after years of fraudulent billing practices by the giant health insurance companies. The American Medical Association (AMA), represented by experienced trial lawyers, won a $350 million settlement in the case AMA v. United Healthcare. United Healthcare is the largest health insurer in the country. Many people have suggested that true health care reform must begin with health insurance reform, and the fraudulent insurance practices revealed in this case certainly seem to support that claim.

When you or I go to receive medical treatment using a health insurance policy, we typically are charged one rate for “in-network” providers, while paying more if we opt to visit an “out-of-network” healthcare provider. The insurance company bases the out-of-network rates on what is considered “usual, customary, and reasonable”  (UCR) charges for the treatment that is given. Then the insurer calculates the UCR rates for that treatment and decides how much to reimburse the out-of-network provider. The calculation of UCR rates for healthcare is often done using software known as the Ingenix database. Ingenix, however, is a wholly owned subsidiary of United Healthcare. The court found that United Healthcare was exploiting this conflict of interest, to systematically miscalculate the amount they chose to reimburse out-of-network providers. The Ingenix database, while wholly owned by United Healthcare, was also used by other large health insurers to determine UCR charges for out-of-network services. Several other cases are working their way through the courts which allege that those insurers have been using the database to conduct similarly fraudulent practices. United Healthcare was found to be in violation of the Employee Retirement Income Security(ERISA) Act and the Racketeer Influenced and Corrupt Organizations (RICO) Act, and ordered to pay $350 million to health care providers and subscribers for out-of-network services. Watch this great video from the AMA to better understand the case itself, and to see how trial lawyers and healthcare providers can work together to help improve the efficiency of the health care system in America.