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Bitter Pill (California LawBusiness)

California LawBusiness (October 25, 1999) – Small Firms Jeffrey Anderson
Bitter Pill

Motivated by the death of his sister, Oxnard lawyer Mark Hiepler has made a full-time practice of suing HMOs to ensure that others get better care.

Patients haggling with their health maintenance organizations sometimes benefit from a little name-dropping. These days, that name is: “Mark Hiepler.”

“People tend to give up and accept the pain,” she says.

Hiepler does not.

After receiving national attention for a string of successful verdicts against major health plans-including $89.3 million against Health Net, $6.88 million against a neonatologist for Cigna Health Corp. and $3 million against an HMO physician with metropolitan Life-his influence cannot be overstated.

Sadly, the renown to affect people like Green came at a heavy price: In 1993, his sister died of cancer after Health Net refused to pay for a bone-marrow transplant.

In 1991, Hiepler’s older sister Nelene Fox discovered she had breast cancer. She was 38. Despite two mastectomies and chemotherapy, her cancer was close to incurable by April 1992. Her only option, a bone marrow transplant with a one-in four chance of success, cost $180,000. Health Net deemed the operation “experimental” and denied coverage.

Hiepler, who was then a 31-year old litigation associate with Oxnard’s Lowthrop, Richards, Miller, McMillan, Conway & Templeman, and his wife Michelle Hiepler, also a lawyer, began looking for a way to force Health Net to pay. They filed an injunction against the HMO and began raising money for the operation, in case the injunction failed.

But Health Net would not relent.

The Hieplers raised enough money for the operation by August 1992 and Fox received the transplant, but the cancer had metastasized beyond cure. She died in April 1993.

Following his sister’s death, Hiepler sued Health Net on behalf of her husband and three children and won an unprecedented $89.3 million jury verdict. The effects of that lawsuit traveled far beyond the verdict.

“Within 48 hours the insurance industry was buzzing, and health plans started revising their internal review policies.” says Hiepler.

The U.S. Office of Personnel Management also ordered 350 health plans covering 9 million federal employees, retirees and dependents to start paying for bone marrow transplant for cancer patients or risk losing government contracts. Emboldened by their victory, the Hieplers started their own firm in 1994. Mark Hiepler declined an offer of partnership from Lowthrop Richards, and Michelle Hiepler a former associate with now defunct Los Angeles’ Adams Duque and Hazeltine, left her position as assistant general counsel at Pepperdine University.

Their mission, they decided, was to fight for clients who had been wrongfully denied medical treatment.

Hiepler says news of the Health Net case brought in 150 new cases in the months following the verdict. He was in need of help when he hired a former law school recruit from his alma mater Pepperdine University, James McGinley.

Hiepler had recruited McGinley to clerk at the Los Angeles office if Sedgwick, Detert, Moran & Arnold in 1990 when McGinley was an editor of the Pepperdine University Law Review and Hiepler was a budding defense litigator. By 1992 Hiepler had moved over to Lowthrop, and McGinley had finished law school and joined Sedgwick as an associate. (In the interim, McGinley saw active duty as a U.S. marine Corps pilot in Operation Desert Storm in 1991.)

McGinley was already established as a product-liability and medical-malpractice defense specialist when Hiepler brought him in as a Hiepler & Hiepler‘s first associate in 1994.

With Michelle Hiepler working at home to be closer to the Hiepler’s daughter-the couple has since added two sons-McGinley quickly made himself an indispensable member of the firm. His research and writing skills meshed well with Mark Hiepler‘s advocacy skills, and he became a partner in 1997.

Today, in addition to dealing with technical experts at trial, he also handles the firm’s appellate practice with Michelle Hiepler – keeping Mark Hiepler free for depositions, trial work and speaking engagements.

Although the firm does a limited amount of transactional work and insurance negligence cases, 90 percent of its work is contingency-based litigation involving physicians and health plans. A recent trend, says Hiepler, is representing anorexics who have been denied health care on grounds that their illness is psychological.

Hiepler says the firm has two principal hallmarks: tenacity and ethics.

“I have a competitive side,” he says, ” I will stay up all night to win a rear-end collision case, or file 100 motions to compel to get a document I think is out there.”

Hiepler’s zealous advocacy, McGinley says, is tempered by the firm’s sound approach to the practice of law. “We believe in fighting fair, and we look to avoid unnecessary litigation,” he says, ” But we’ve never gone to trial without getting a seven-figure verdict.”

For both McGinley and Hiepler, their crusade stems naturally from strong religious foundation: Hiepler grew up the son of the Lutheran minister, and McGinley’s father in-law is a deacon in the Catholic Church.

“You have to have faith going up against big foes,” says Hiepler. People want more than a financial recovery. They need a counselor, a friend.”

Their winning formula has made the name “Hiepler” synonymous with patients’ rights. “We still get about 125 new case calls per month,” he says.

Financial success has not diluted Hiepler’s passion for existing justice. Memories of his late sister-the youngest of his three sisters-are inseparable from his law practice. As a result, he still offers each client up to 40 hours of free self-help advice just to keep cases out of the legal system. “Because of Nelene’s case there’s been 163 treatment denials that were reversed without going to suit,” he says.

Although he strives to avoid costly litigation, sometimes the only thing a big corporation understands, says Hiepler, is being served with papers.

Still Hiepler is selective about the cases he accepts for trial, “We have to get to know the family and believe in the credibility of the case. We work on a case-by-case contingency, but I work like I’m on an hourly retainer and we spend lots of money. I think jurors get the sense we believe in what we’re doing,” he says.

And clients get the sense, adds Hiepler, that their case means more than just business.

“Our clients have become lifelong friends,” he says. “They know I’ve sat outside the doctor’s office and received bad news.”

Patients and their health plans aren’t the only ones affected by Hiepler’s diligence.

Under managed care, doctors have formed medical groups and independent physicians associations that contract with the HMO’s for referrals. Those groups have settled for capitated, or per-patient flat-fee arrangements that limit physician compensation. When an HMO gets sued and loses, says Hiepler, physicians feel vindicated. “Doctors say to me, ‘We signed away our profession, what your doing is our only hope of getting some leverage back.’ “

New California legislation that could turn up the heat on the HMO industry has the potential to further shift risk away from medical groups, he says.

In September, SB21, introduced by Sen. Liz Figueroa. D-Fremont, was signed by Gov. Gray Davis. It allows private sector workers to sue their health plans directly for “substantial physical harm or significant financial loss” caused by delay or denial of treatment.

Prior to SB21, only government workers, church workers and people who paid for their own insurance could sue their HMOs. For instance, as a public school teacher, Nelene Fox’s husband, Jim, had standing to sue Health Net directly.

Although the Employee Retirement Income Security Act of 1974 exempts employer-based benefit plans such as Health Net from medical malpractice laws, SB21 specifies it is intended to regulate insurance-not employee benefits-to avoid HMO arguments that ERISA exempts them from liability.

SB21, says Hiepler, could redistribute the risks inherent in an overburdened health-care system characterized by bureaucracy and greed.

“[HMOs] have a wall of immunity around the billion-dollar castle,” he says. “Now there’s more reason for them to scrutinize their internal systems for denying medical treatment.”

Despite constant demand for his service, Hiepler says the firm is determined to remain small. Partners McGinley and Mark and Michelle Hiepler are supported by just two associates. One screens cases and provides free-self help advice for clients, and the other assists Mark Hiepler with motions.

The firm also routinely uses five contract attorneys for large cases, and five Pepperdine law clerks for client-intake evaluation, says Hiepler.

Associate salaries, he says are above market for firms its size. There are no billable hour requirements but according to Hiepler, everyone works “ungodly hours.’

However, making partner is not likely. “I tell [incoming associates] not to get their hopes up,” he says “I have seen firms grow in size and become an hourly practice. The next thing you know they are doing insurance defense to pay the bills. We want to avoid a big pyramid. There are huge overhead costs [in contingency practice] and being an equity partner is not feasible. It’s too risky.”

Yet, Hiepler knows as well as anyone that people can be motivated by more money. “We attract and keep the best people, and we expect a lot out of them,” he says.

Hard work, long hours and a low-hanging ceiling are somehow not enough to discourage prospective hires. Hiepler in not surprised.

“I have received resumes from opposing counsel just after the trial,” he says. “They see what we are trying to accomplish and they want to be part of it.”