Ethics Pinched by the System (USA Today)

Ethics pinched by the system lawyer says
By David Leon Moore USA TODAY

'Assembly-line medicine' has human cost, says Hiepler. Mark Hiepler keeps winning cases and burying clients.

The winning has made him famous in legal circles and infamous in health care industry circle.

The burying has inspired Hiepler, a 33-year old lawyer who specializes in health care cases here, to battle daily to get medical treatment for patients within a system he believes is increasingly ethically corrupt.

His target is the denial of care and what he contends are the financial incentives that health maintenance organizations give doctors to withhold treatment.

It's a debate swirling in doctor's offices, courtrooms and within the American Medical Association, and its latest flash point is a system of paying doctors called "capitation."

Hiepler and other critics contend that under capitation, many HMOs saddle their doctors with an irreconcilable conflict of interest: looking out for their patients or watching out for their paychecks.

"I am not trying to destroy HMOs," says Hiepler, "I am just trying to make them accountable to the patients who make them multibillion dollar companies.'

To the HMOs he attacks, however, Hiepler is misleading, trapped-in his-own-rhetoric conspiracy theorist- yet another lawyer out to make a buck off someone else pain.

"No matter what he calls himself, a crusader or whatever, he's just another plaintiff attorney," says Don Prial, a spokesman for Health Net, the largest for profit HMO in California with about 1.4 million members and a target of Hiepler's lawsuits.

Nor, says lawyer Mike Gonzalez, who has battled Hiepler in court, does he offer any solutions.

"The public wanted affordable health care, and HMOs are a mechanism for that," Gonzalez says. "I don't see Mark offering something better. The outcome of fee-for-service medicine was that costs kept rising and that more and more people were becoming uninsured."

Largest award against insurer

  • Right or wrong, Hiepler's audience is growing. The reasons are the three earthquakes he sent through health insurance industry:

• In November, Hiepler won a $3 million jury verdict (Reduced by a California law
to around $700,000) in a medical malpractice case against two California
doctors Hiepler accused of practicing "assembly-line medicine" in an "HMO mill."

His client, Joyce Ching 34, died of colon cancer in April 1994.

  • In October, he won a $1.2 million award against Health Net when an arbitration panel ruled the HMO, improperly interfered with doctors' judgment.

His client, Christine deMeurers, 35 died of breast cancer last March.

  • Two years ago, he won a landmark $89.3 million jury verdict against Health Net (the case was later settled for an undisclosed amount) after the HMO denied a bone marrow transplant to treat breast cancer.

His client, Nelene Fox, 40 died in April 1993.

The Fox case put Hiepler on the legal map. It was the largest award ever against an insurance company for the denial of health benefits.

It also shaped Hiepler's life

Nelene Fox was his sister.

Nelene is Mark's constant inspiration, a silent partner in Hiepler & Hiepler, the law firm run by Mark and his wife, Michelle, and dedicated to fighting for HMO patients' rights.

Hiepler now sees a steady stream of clients, and since the Fox verdict he has helped 124 of them get treatment that originally been denied. Many were women with breast or ovarian cancer.

"When I look into the eyes of each one of these people, I usually see my sister," he says. " I will never understand why someone my sister's age, with all her abilities and so many depending on her, had to die."

'Financial incentives are to underserve'

As HMOs become major forces in more and more states, consumer groups and patients advocates report a growing chorus of complains about denial of care.

"The more managed care permeates the country, the more the questions of denial of care rises to the top," says Cathy Hurwit, legislative director of Citizen Action, a Washington, D.C., consumer group. " We are seeing a sort of mirror image of fee-for –service, which was criticized for over treating. In managed care, the financial incentives are to underserve." Nonsense, say the HMOs.

"The incentives are to make sure that unnecessary care is not provided, to provide care at the most appropriate level and to provide prevention care. Are HMOs perfect? No. Does that mean that fee-for-service is better? No."

Moreover, HMO advocates add, undeserving a patient can lead to complications more costly than treating the problem, outright.

In this national debate, an increasingly prominent voice belongs to Mark Hiepler.

"HMOs," Hiepler says, "have seduced us with these nickel-and-dime co-payments…Ninety percent of Americans are healthy, and those people love HMO. It's the ones who are sick who…learn too late how managed care works."

Hiepler's latest attacks have been aimed at capitation-the system by which about half of the nation's HMOs pays their doctors.

Under such a system, doctors get a flat fee per patient per month.

Capitation systems vary, but increasingly doctors receiving larger capitation fees must pay for referrals, diagnostic tests and emergency care up to a negotiated maximum-usually $5,000 or more per patient. Beyond that, the HMO pays.

It means that if the doctors provide more in services than they receive in fees, they lose money on those patients. On patients who visit the office once a year for a check up, the doctors make money.

This simple equation, Hiepler contends, is potentially deadly.

Dave Ching agrees.

Charges of greed 'totally unfair'

Hiepler was in the middle of his sister's case when Dave and Joyce Ching walked through his door.

Joyce had a colon cancer. The tale they told about Joyce's treatment by Dr. Elvin Gaines and Dr. Daniels Engeberg, two Simi Valley, Calif. family doctors lead to a malpractice suit Hiepler hoped would put capitation itself on trial.

Joyce visited the doctors complaining of rectal bleeding and abdominal and pelvic pain. But it took 11 weeks-and repeated requests by the Chings for a referral to a specialist-before the doctors sent her to a gastroenterologist. Her cancer was immediately diagnosed but too late. She died 20 months later. When Hiepler first told the Chings about the capitation agreement between the doctors and Metropolitan Life's HMO, "Dave started crying." Hiepler says. "He said, 'I got screwed. We were trusting them.'"

The doctor's group- Simi Valley Family practice (Since changed to Family Health Care Medical Group – received $27.94 per month to treat Joyce and was responsible for the first $5,000 it cost to treat her.

As part of the suit, Hiepler charged a "breach of fiduciary duty," alleging that Gaines and Engeberg declined to refer Ching to a specialist because the cost of the referral would come out of their pockets.

HMOs and their critics keenly watched the case to see how the argument about capitation would play before a jury. But on the eve of closing arguments, Superior Court Judge Ken Riley threw out that portion of the suit, saying Hiepler had not made his case about financial motives.

Gaines and Engeberg were found negligent; capitation, incentives and risk-sharing were untouched.

Rightfully so, says Gonzalez, the doctors' lawyer.

"The allegations of greed were totally unfair," says Gonzalez, whose clients declined interview requests. "These doctors are wonderful men, and putting them though this mill was totally without merit."

The real reason the doctor's didn't refer Ching to a specialist earlier, Gonzalez says is because it's rare for a woman of that age to have colon cancer.

Maureen O'Haren, a lobbyist for the California Association of HMOs, says the Ching case, while tragic was no indictment of HMOs or their business agreements with doctors.

"I just don't think doctors are refusing to treat something that might be serious to save a little money." O'Haren says. "And these doctors didn't save any money. They ended up having to pay the full $5,000".

Hiepler contends, however that in big medical groups like Gaines' and Engeberg's, gambling that someone isn't sick is financially worth the risk.

"You save a little money on each patient, multiply that by thousands of patients, and you've got a very profitable way of doing business," he says.

"And you've got enough money to gamble on someone becoming sick. After all, most people don't have cancer. But Joyce Ching did."

Hiepler has three more cases that, if they go to trial, might include an allegation of breach of fiduciary duty. He believes the law supports such an argument but concedes it will be difficult to prove.

"The judge basically said you need a confession from the doctor, and that's not going to happen," he says. "We'd like to get it before a jury, though, describe the financial incentives and let the jury decide."

Dave Ching, who lives in Fremont, Calif., with his 5-year old son, Justin, needs no further convincing.

"I feel good that Joyce and I were able to help him send another message," he says. " The HMOs may be too big for us to really make dent, to make any major changes. I know one thing, though. "They're wishing that Mark would go away"

Lawyer Hiepler's high-profile cases.

Fox vs. Health Net.

  • The facts: Nelene Fox, a wife and mother in Temecula. Calif., had breast cancer. Although her doctor recommended a bone marrow transplant, she was denied coverage. Her HMO, Health Net, considered the $150,000 procedure, with her advanced cancer, experimental. Through fund-raising, Fox underwent the treatment but died in April 1993 at 40. Her husband sued, revealing financial incentives for Health Net officials to limit expensive procedures.
  • The verdict: In December 1993, a Riverside (Calif.) county jury found Health Nets refusal constituted a bad faith breach of contract. The jury awarded the Foxes $89.3 million, including $77 million in punitive damages. Health Net filed a motion for a new trial but reached a settlement for an undisclosed sum.

DeMeurers vs. Health Net.

  • The facts: Christine deMeurers, a teacher, wife and mother in Lake Elsinore, Calif., had breast cancer. She was approved for a bone marrow transplant by her doctors. Health Net, her HMO, refused coverage because it considered the treatment, in her case, to be experimental. UCLA paid for the treatment but deMeurers died last March at age 35. Her husband sued Health Net.

• The decision: In October, a three-person arbitration panel rules that Health
Net breached its contract in bad faith and intentionally inflicted emotional distress.
Health Net, the arbitrators wrote, "crossed the line" in improperly seeking to influence
the doctor's medical judgments. The arbitrators awarded $1.2 million in damages.

Ching vs. Gaines et al.

  • The facts: Joyce Ching a wife and mother in Agoura, Calif. was enrolled in a Metropolitan Life HMO. She visited her primary care doctor, Elvin Gaines of Simi Valley, Calif., complaining of abdominal pain and rectal bleeding. For almost three months, Ching and her husband requested a referral to a specialist but were denied. When she was finally referred to a specialist, she was diagnosed with colon cancer. She died in April 1994 at age 34. Her husband, Dave Ching, sued Gaines, Dr. Daniel Engeberg and their medical group for malpractice. Hiepler, Ching's lawyer, also alleged a breach of fiduciary duty, charging that the doctors, because they were being paid a capitated fee of $27.94 a month to treat Ching and would have to pay out of their pockets for costs exceeding that amount, were motivated financially to deny referrals.
  • The verdict: In November, Ventura County (Calif.) jury found Gaines and Engeberg negligent and awarded $3 million in damages – reduced to about $700,000 under a California law.The judge, before closing arguments, threw out the part of the suit alleging that Gaines and Engeberg acted out of greed.

When doctors become sub-contractors of medical care.

The arrangement is called "capitation", and it's the latest flash point in the battle over HMOs. HMO models vary widely, but the fastest-growing plans these days are called "network" models or IPAs (independent practice associations), in which independent doctors, usually banding together in large medical groups, contract with HMOs. Under more than half of these plans, doctors receive a flat fee from the HMO for every patient. That's capitation. Some capitation payments are as little as $8 or $10 a month, in which case the doctor is usually responsible for primary care only.

A growing number of contracts, however, require doctors to share the risk of insuring patients. Under such agreements, HMOs pay doctors larger capitation amounts-typically $30 to $50 to provide all outpatient care.

The doctor then must pay for referrals, diagnostic tests and emergency care up to a negotiated maximum per patient-typically $5,000 or more. Beyond that, the HMO pays.

The idea is that when doctors are paid up front, they have the incentive to provide preventive care and keep their patients healthy.

And indeed, most patients remain healthy, visit their doctors infrequently and cost little to treat. Doctors make money on these patients, and the monthly payments for them provide the funds for doctors to treat sick patients.

But with sick patients, critics say doctors are put into a conflict of interest: They lose money out of pocket," says Dr. Wayne Nishigaya, a family doctor in Anaheim, Calif. "That's a horrible system. It can be a real incentive to not do something."

The American Medical Association's policy statements say that managed care financial incentives, including capitation, "are not inherently unethical."

However, says a report from the AMA's Council on Ethical and Judicial Affairs, the incentives can be unethical, "depending on their design and intensity."

The AMA maintains that rules in many HMOs preventing doctors from talking about the plans and their incentives "are totally unethical and should not be tolerated," according to Dr. Nancy Dickey, current AMA chairman.

In general, Dickey says, "It is very difficult to say this particular amount is wrong when it comes to incentives. But where the incentives are so intense that the physician's ability to make good care decisions is influenced, those decisions are unethical."

Three questions to ask your HMO

Consumer advocates say patients need to be more informed and persistent about their rights. Since HMO and other managed-care plans vary widely, they suggest getting answers to these questions before joining an HMO.

  • Do primary care doctors get more money if they deny referrals to specialists?
  • Can the HMO terminate its contract with the doctor if the HMO believes the doctor is over-utilizing services?
  • Do primary care doctors receive bonuses from the HMO if they limit referrals?

Maureen O'Haren of the California Association of HMO's says that if HMO doctors disclose their incentives, then so should fee-for-service doctors, who have been criticized for ordering unneeded test to make more money.

­­­­­­­­­­­­­­­­_______________________

By David Leon Moore