Perspective: The AMA flexes its legal muscle

March 21, 2008

How the Litigation Center at the AMA works on behalf of physicians

The announcement last month that New York Attorney General Andrew M. Cuomo was getting ready to sue UnitedHealth Group and its subsidiaries over "fraudulent, deceptive, and illegal business practices" drew a flurry of media and other attention.

At issue was the system the insurer has been using to set reimbursement rates for out-of-network services. The AG's office alleges that the system incorporates intentionally flawed data, thereby yielding "unduly low reimbursements to members." UnitedHealth Group, which has promised to cooperate fully with the AG, has defended its rate-setting methodology, adding that it's "committed to fair and appropriate payment for physicians, the state's other healthcare providers, and consumers."

The AMA applauded the Cuomo announcement, and with good reason. Since 2000, it's been among the lead plaintiffs in a nearly identical lawsuit against UnitedHealth Group, one of a number of legal actions the AMA has been involved in through its Litigation Center.

The Litigation Center does more than focus on managed care issues, of course. It's also been involved in a string of other suits. Last year, it joined a potentially landmark suit against the Baptist Health System, the largest hospital system in Arkansas. After Baptist terminated several doctors' staff privileges because of indirect investment interests in a competing hospital, the physicians sued, arguing that Baptist's economic credentialing policy was invalid.

The trial court enjoined Baptist from terminating the doctors pending trial-and, on appeal, the Arkansas Supreme Court affirmed the lower-court ruling, in part because it saw the importance of preserving the doctor-patient relationship. Besides joining the suit, along with the Arkansas Medical Society, the Litigation Center has also provided financial aid to the plaintiffs. "The case definitely has the potential to be as or perhaps more important than the United Healthcare case," says attorney Leonard Nelson, staff director of the Litigation Center.

When little problems become bigger ones

Still, from a glance at its past and ongoing activities, the Center's legal energies seem disproportionately directed at managed care. Why this focus?

First, says Nelson, the Center tackles issues important to the medical profession, and managed care clearly fits that bill. Beyond that, he says, the AMA believes it can make a difference in this "enormously complex" aspect of healthcare. "Because of that complexity, people sometimes make mistakes, even those with the best of motivations," he says. "Individually, those mistakes may be very small, a matter of $10 or $20 extra that a managed care organization owes to an individual physician. But if you multiply a small mistake by 100,000, suddenly you're talking about some real significant money." The AMA, he says, uses its expertise and name recognition to call attention to such compounding problems, sometimes through litigation.

Whether this is the best way to resolve problems is unclear. But for the foreseeable future at least, the courtroom-or the threat of it-may be as central to the shape of healthcare in this country as any government executive or legislative body is.