N.Y. AG announces agreement to stop wrongful medical claim processing

By Bryan Cohen | Jun 14, 2012


NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman announced two agreements Tuesday with a major health insurance company and a 20-provider group to cease allegedly improper healthcare claims and billing practices.

Group Health Inc., a health insurance company with more than one million New York state customers, and New York Medical & Diagnostic Center Inc., a New York City provider group, allegedly failed to cover consumers for healthcare that should have been covered. The consumers alleged that despite following the rules of their insurance coverage, they received unexpected doctor bills. Under the terms of the settlements, the parties must refund patients up to $500,000 and cease allegedly unlawful activity.

"Unexpected medical bills are a devastating problem for New Yorkers. Insurance companies and health care providers must be held accountable for violating the law and overcharging patients," Schneiderman said. "Plans and providers must take care to abide by the terms of their policies and contracts, and not exacerbate the already significant financial burdens consumers face in getting the health care they need.

"At a time when legitimate medical bills are already an extraordinary burden on New Yorkers, improper billing and claims practices are even more deplorable."

GHI's health insurance policy was required to cover certain key out-of-network medical providers, including radiologists, pathologists and anesthesiologists, at a higher rate with no member cost-share. Despite the requirement, GHI allegedly processed claims at a standard out-of-network rate leading to patients being billed amounts reaching thousands of dollars for covered physician services when they should have paid nothing.

Under the terms of the agreement with GHI, the company will reimburse affected members. It has already returned $162,000 to New York consumers and is expected to return close to $500,000 in restitution for three years worth of claims. The company must also retain an auditor to make sure all eligible members receive funds, pay a penalty, train its employees and assist consumers with the resolution of any debt collection activity.

NYMDC allegedly billed patients the difference between its charge and the payment by the patient's health plan, even though NYMDC is a participating provider with the health plan and must accept the plan's payment as payment in full. Balance billing, as the practice is known, is prohibited by the provider's contractual obligations and New York law.

Under the terms of the agreement with NYMDC, the company must refund affected patients who were allegedly improperly billed for covered services, retain an auditor to make sure all eligible consumers receive refunds, send notices to patients, make sure all collection activities cease and that patients' credit standings are restored to good order, pay a penalty, train its employees and reform its practices.

NYMDC is a medical practice based in Kew Gardens, Queens and GHI, which provides insurance to consumers in 28 counties throughout the state, is a part of Emblem Health.

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