When an HMO demanded repayment on what it called questionable claims, Anthony Foong refused. Then his troubles really began.

Disputes over billing and coding are nothing new for doctors who participate in managed care plans. And too often, doctors feel helpless in the face of a plan's demand for reimbursement for claims it has already paid. After all, the plan has more power and money, and can withhold payment on other claims until the doctor gives in and pays up.

Anthony Foong refused to do either. But his stand brought him a six-year battle—including two years in court, dried-up reimbursements from one of his practice's major payers, and eventual termination from the plan. Here's an account of his struggle, as detailed in the court records.

As one of the few board-certified gastroenterologists in New York's Chinatown, Foong had built a busy solo practice there. For 10 years, he had no problems dealing with Empire Blue Cross and Blue Shield's HMO, which covered a large number of his patients.

In March 1997, however, Empire conducted a "post-payment audit" of Foong's records, and asked him to provide charts for five patients. The following month, Empire called him to a meeting to discuss those records with three members of its fraud division, including its medical director.

They told Foong he was "overutilizing" colonoscopies and endoscopies, and was performing significantly more of them than his network peers. Foong insisted the procedures were all medically necessary, and pointed out that nearly all of his patients were Chinese, an ethnic group that typically suffers a high incidence of GI disease.

The following month, after reviewing five more charts, the manager of Empire's fraud division notified Foong that 40 percent of his endoscopies were "not medically indicated." The HMO demanded immediate repayment of more than $73,000. (Empire apparently reached that sum by extrapolating its findings from the charts it reviewed to all the endoscopies Foong had performed on Empire patients over several years.) If Foong didn't repay the money within two weeks, the letter warned, "other action may be required."

A losing fight against an HMO

Foong retained the services of the League of Physicians & Surgeons, an advocacy group, which advised him to withhold any refunds pending its inquiry. The League's executive director sent several letters to Empire demanding to know how it reached its decision that Foong was overutilizing endoscopies. In one letter, she wrote that Empire's "use of its fraud department to frighten doctors into making [a] refund comes perilously close to extortion." Empire did not reply.

On several occasions, Foong proposed submitting the 10 disputed cases to an independent review, but Empire declined. Instead, it gave him an ultimatum: either undergo a full audit of all his records, or the HMO would sue him.

Foong considered a full audit unacceptable. Instead, he submitted the 10 cases to the New York County Medical Society's peer review committee, which retained an expert gastroenterologist to review them. The expert concluded that all the disputed procedures were "medically necessary, and demonstrated, in each case, sound medical practice." The society notified Empire of this expert's opinion, and attempted to mediate the dispute on Foong's behalf, but Empire didn't respond.

Since Foong refused to pay the $73,000, Empire began withholding payments for his subsequent claims, an amount that eventually totalled more than $114,000. In January 1998, Foong's lawyer sent a complaint to the state insurance department. When that agency inquired about the nonpayment, Empire replied that it couldn't respond because the dispute was "currently part of a litigation action." (In fact, neither party had initiated legal action at that time.) The insurance department dropped its investigation, saying the matter was "outside our jurisdiction."

Termination leads to a lawsuit

In June 1998, Empire's credentialing committee met to discuss Foong's performance—without offering him an opportunity to attend the session, or to review or refute the evidence against him, according to his legal complaint. Based on the same 10 patient records, the committee members concluded that Foong had demonstrated "poor clinical judgment" and posed "the threat of imminent harm to Empire's Managed Care members."

Empire then sent Foong a letter informing him that he was being terminated "immediately." The letter contained no explanation for his termination, or why Empire had waited more than a year since its original review to drop him if he posed such an "imminent" danger to his patients. One week later, Empire notified the New York State Department of Health's Office of Professional Medical Conduct about Foong's termination. That letter discussed his allegedly unjustified procedures, and also included an accusation that Foong had falsified his medical records, a charge his attorney had already refuted. The OPMC investigated Empire's allegations, but found no grounds to warrant any action against him.

The dispute simmered over the next three years. In negotiations with Foong's attorney, Empire eventually agreed to pay about 70 percent of the $200,000 it owed him. However, that didn't make up for the roughly 40 percent of his practice Foong claimed he'd lost as a result of his termination.

Besides, by then he was angry. "It was outrageous what Empire did to me," Foong said at the time. "There was no justification for their actions. They used intimidation and fear. They were trying to blackmail me."

In May 2001, Foong sued Empire for breach of contract, denial of due process, wrongful termination, and bad faith reporting to state agencies. His suit demanded $2 million in compensatory damages, $5 million in punitive damages, and reinstatement as a network provider.

Battling over due process

Empire moved to dismiss the suit, claiming a contractual right—even an obligation—to terminate Foong once it determined that he was a threat to its patients. Empire insisted it did so only after an extensive investigation of his records, and after what it termed his "refusal to cooperate" with the HMO.

Foong's attorney, Scott Einiger, charged that the doctor had been terminated not for medical reasons, but in retaliation for refusing Empire's demand for reimbursement of the disputed claims, and for reporting the HMO to state authorities for not paying his claims.

To support his due process charge, Foong cited a provision in New York's Public Health Law that protects health plan network physicians from arbitrary termination. That law requires that the plan must first give them a written explanation for the proposed termination, and grant them a hearing or review before a panel including at least one of their clinical peers. Foong claimed he was denied those opportunities. But Empire pointed out that the law does not require such an explanation or hearing if a physician poses a threat of "imminent harm" to patients.

Foong's charge of bad faith focused on Empire's report to the Office of Professional Medical Conduct about his termination. Empire responded that the state's Public Health Law provides legal immunity for any person or organization that reports physician misconduct to the state board "in good faith and without malice." Foong insisted, however, that since Empire's report to the OPMC contained information that was "false, malicious, and defamatory," it was not made in good faith.

Since the state health law contains no explicit provision for enforcing a physician's due process rights in such conflicts with health plans, one key issue in the case was whether Foong even had the legal right to sue Empire for damages. Judge Charles Ramos, who presided over the case, ruled that the law does imply such a right.

In September 2002, Judge Ramos denied Empire's motion for dismissal on four of five counts, which meant that the case could proceed to trial. Empire appealed that decision, focusing primarily on whether a physician has a right to sue an HMO for damages over an alleged denial of due process. That issue is so controversial that the case attracted considerable attention. The Medical Society of the State of New York and the AMA filed a joint brief supporting Foong's right to sue, while the New York Health Plan Association filed a brief in opposition.

At long last, a victory of sorts

Last May, six years after his battle with Empire began, the appellate court upheld Foong's right to sue for damages over wrongful termination, breach of contract, breach of good faith, and denial of due process. Jeffrey Ribner, a neurologist and president of the Medical Society of the State of New York, hailed the appellate decision as "a victory for all physicians and patients. [It] will send a clear message to healthcare plans that they cannot take arbitrary action against physicians."

Rather than face trial, Empire settled the case a month later on what both sides called mutually satisfactory terms. While the amount of money Empire paid Foong remains confidential, the HMO did reinstate him in its network.

Unfortunately, Foong's experience has become increasingly common, according to officials at several state medical societies. Donald Moy, MSSNY's general counsel, cites several other cases in which New York health plans have reported physicians to state authorities based on allegations similar to those against Foong. "The HMOs call it fraud," says Moy, "but it's usually just a disagreement over coding. They're elevating a simple billing dispute to the level of a criminal act."

Scott Einiger, the attorney who represented Foong, and who serves as special counsel for the New York County Medical Society, knows of dozens of other doctors who've been threatened with termination based on what he calls "unjustified complaints of fraud or substandard care."

In several cases, he says, "health plans have tried to force physicians to pay huge refunds or forgo reimbursement for justifiable medical services. When the doctors don't bow to such demands, the plans either bring meritless litigation against them, or file complaints or threaten to report them to state licensing organizations. That creates an atmosphere of fear and intimidation, and damages the physicians' reputations."

 

Berkeley Rice. How I beat an HMO. Medical Economics Jan. 9, 2004;81:88.