Although some physicians continue to claim medical malpractice liability is the biggest problem affecting access to health care (despite the total cost of medical malpractice premiums being $0.50 for every $100 spent on health care, and despite premiums being the lowest they’ve been in over forty years), the real problem, as alluded to by this American College of Surgeons report, is "declining reimbursement."

That’s a euphemism for one of the ugliest businesses in America.

We got a glimpse into that ugly business last week, when Bayonne Hospital Center sued Horizon Blue Cross Blue Shield of New Jersey (hat tip: Movin’ Meat), the largest health insurer in New Jersey, with just under 4 million insureds. The press release is mind-boggling:

The complaint, filed late yesterday in the U.S. District Court in Newark, New Jersey, provides a detailed account of Horizon’s business practices which run counter to the insurer’s contractual duties to its customers, its obligations under state law and its stated commitment to the interest of public health. Some of the most offensive Horizon practices detailed in the complaint include:

  • A systematic campaign discouraging patients from seeking emergency care at BHC despite it being the closest and safest option for urgent care for the residents of Bayonne
  • Intimidation of patients by threatening denial of coverage if they seek treatment at BHC
  • Interference with care by sending couriers to BHC to tell patients undergoing medically necessary treatments to leave BHC and seek care at a hospital that is “in network”
  • Indefensible denial of claims, often while the patient is still undergoing care
  • Unilateral determinations by Horizon bureaucrats that emergency room patients are medically stable enough to be discharged to home or transferred to other in-network facilities without consulting the patient’s attending physician

The complaint not only details Horizon’s atrocious behavior and policies with BHC, but also exposes Horizon’s multi-billion dollar financial success at a time when New Jersey’s hospitals cannot afford to provide healthcare to the communities which they serve. The complaint also reveals Horizon’s gold-plated executive compensation packages and its publicly stated plans for conversion to a “for profit” entity and initial public offering.

Keep than in mind next time someone tells you health care reform might involve "rationing." We’ve already got rationing, but right now it’s done for profit, and done without any regard for your health or safety.

The complaint (a poorly rendered version is available here) alleges thirteen counts, which I break into four main types of claims: antitrust, ERISA, consumer fraud (including Lanham Act), and business torts.

I find that approach a little odd. Most cases involving fraudulent claims denials by insurance companies — like Grider v. Keystone Health — primarily allege racketeering ("RICO") claims. Antitrust continues to be notoriously hard to prove, and recent efforts to reform it have already run into trouble. ERISA is a wicked beast of a claim, with dozens of loops and curveballs, and though it quite clearly covers how employers administer the health benefits plans they run, it’s not clear how it applies to the health insurance company itself.

That said, these cases aren’t easy or simple, and I give the lawyers credit for creativity. They may end up making good law here, and perhaps they’ll amend to allege RICO later.

Of course, let’s not forget why Grider v. Keystone Health became so prominent: because the defense lawyers for the health insurance company, taking their cues from the client, brought the obstructionism and deception that pervades the health insurance industry into the courtroom, prompting severe sanction from the court.

Like I said: one of the ugliest businesses in America.