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Texas, PacifiCare settle unpaid claims lawsuit

Texas attorney general Greg Abbott has reached an agreement with PacifiCare of Texas, Inc. that will allow Texas doctors to receive million of dollars they are owed for care provided. 

Under Texas law, HMOs such as PacifiCare, are required to promptly pay phyisicans for services rendered within 45 days of receipt for clean claims that need no further information.  According to the agreement reached, the current lawsuit will be put on hold for several months while PacifiCare fully implements terms of the agreement and begins paying the delayed claims.

“I am proud that we were able to enforce Texas’prompt pay law in a manner that will benefit doctors and ultimately their patients,” said Attorney General Abbott.  We have put in motion a process that will temporarily suspend our lawsuit against PacifiCare, but at the same time, the agreement puts a strong burden on the company to make sure the physicians are treated fairly.”

Texas Department of Insurance Commissioner Jose Montemayor said the agreement represents progress.

"The agreement reached between the state and PacifiCare is the culmination of almost two years and thousands of department staff hours expended in an effort to enforce our laws and rules regarding prompt payment," said Montemayor. "I greatly appreciate the efforts of the Attorney General's Office in helping resolve this issue on behalf of Texas physicians and hospitals."

The Texas Medical Association today lauded Attorney General Abbott's efforts.

"The attorney general and his staff did an excellent job on behalf of Texas physicians to convince PacifiCare that it's in their best interest to finally pay doctors for services already performed," said Texas Medical Association President Dr. Fred Merian of Victoria.

In filing the suit the attorney general noted that PacifiCare of Texas Inc. had violated state laws, disrupting customers' care and leaving doctors with "millions of dollars" of unpaid claims.

The lawsuit alleged that PacifiCare has failed to promptly pay doctors, does not have an effective consumer or provider complaint procedure, and does not properly monitor independent physician associations (IPA) with which it has contracts to make sure that the IPAs abide by the same laws to which HMOs are held accountable.

Texas contends that PacifiCare's own neglect of three of its IPAs — Heritage Southwest Medical Group in Dallas, Quantum Southwest Medical Management in San Antonio, and Medical Select Management in Fort Worth — contributed to their bankruptcies.

PacifiCare is refusing to pay the doctors and hospitals in its own network for covered services already rendered.

"PacifiCare's violations of the law have had an adverse effect on patient care, violating both the spirit and the letter of the Texas HMO Act and the Deceptive Trade Practices Act," says former Texas Department of Insurance Commissioner Cornyn. "When doctors and hospitals don't get paid as they should — or when they should — and as a result terminate their relationship with a health plan, patients suffer the consequences. PacifiCare has repeatedly promised to clean up its act. It has not done so."

Ongoing problem

Cornyn's lawsuit against PacifiCare stems from an investigation his office launched into nine Texas HMOs in September 2001 and from prompt pay violations uncovered by the Texas Department of Insurance. Cornyn says that while he expects the other eight Texas HMOs will fully cooperate with his prompt pay investigation, PacifiCare has responded instead by filing its own lawsuit against him. The PacifiCare lawsuit challenges Cornyn's authority to investigate suspected violations of state law.

"Despite repeated efforts to resolve that dispute," says Cornyn, "PacifiCare has refused to respond" to his request for cooperation in producing documents central to his investigation.

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