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Connecticut Medicaid lawsuit gains class action status against HealthNet

Physicians Health Services Inc., now HealthNet, is accused of illegally denying health care coverage to its Connecticut Medicaid patients — all 76,000 of whom are now plaintiffs in a lawsuit granted class action status by a U.S. District Court judge on July 5, 2001.

The lawsuit, originally filed in November 1999, is the first class action lawsuit in the country against a Medicaid HMO, says Sheldon Taubman of New Haven Legal Assistance Association, the legal aid provider representing the plaintiffs. It names as defendants both HealthNet, which has a contract to provide Medicaid managed care in the state, and Patricia Wilson-Coker, commissioner of Connecticut's Department of Social Services (DSS).

DSS is accused of failing to protect Medicaid patients from HealthNet's "illegal practices."

Lawsuit alleges improper denials

The lawsuit was originally filed on behalf of four plaintiffs who each had been denied medical treatment, and allegedly were not given the opportunity to appeal their denials. Federal law says Medicaid HMOs must provide written notice when claims are denied, or when different and less expensive treatment is approved instead of the doctor's original recommendation.

Federal law says Medicaid HMOs must provide written notice when claims are denied.

HealthNet routinely fails to provide its Medicaid patients with written notice of denials, alleges the Connecticut class action lawsuit, and does not provide patients with the proper channels to appeal those denials.

Taubman calls the class action certification a "major procedural victory," but HealthNet says the judge's certification does not indicate that the lawsuit has any merit.

The plaintiffs are not seeking monetary damages, but instead are requesting that HealthNet be forced to comply with federal standards for Medicaid claim denials. A trial date has not been set.

On Aug. 13, 2001, the plaintiffs and HealthNet will face a court battle over a motion for preliminary injunction filed by the plaintiffs. That motion seeks to force HealthNet to comply with its state contract and with federal law when it denies behavioral health or prescription claims. It also asks that HealthNet be forced to provide "prompt access to any covered prescription drugs" and that the HMO not receive any state funds from DSS until it demonstrates that it is in full compliance with Medicaid law.

DSS was not available for comment.

Patients were denied therapy and prescription drugs

PHS' denial of care for a young girl, "Karen L.," sparked the lawsuit.

It was PHS' denial of care for a young girl, "Karen L.," that sparked the lawsuit. Recovering from sexual abuse and on Medicaid, Karen L. was granted five therapy sessions, and PHS granted a few more sessions at a time as requested by the girl's therapist. When the therapist requested one visit a week for 12 weeks, PHS denied that request and instead approved one visit every three weeks — and never put that partial denial in writing, the lawsuit says.

Karen L.'s mother was eventually told to contact the state of Connecticut's Victim Services Commission to fund her daughter's therapy. Neither federal law nor PHS' contract with the state allow limits on the number of therapy sessions a child can receive under Medicaid. PHS contracts its behavioral health services to Pro Behavioral Health Inc., which is a third-party defendant in the lawsuit.

Taubman says the HMO is still currently denying coverage to another of the plaintiffs in the lawsuit. Five weeks before the class certification, a 6-year-old girl, identified as "A.M." in the complaint, was improperly denied antidepressant medication that should have been covered by HealthNet.

A.M.'s original complaint, outlined in the lawsuit, states that the child's mother was told by a pharmacist that her daughter's medication would not be covered by HealthNet, then PHS. Because A.M. never received written notice of this denial, she could not appeal the decision. The lawsuit also says that A.M.'s therapist, psychiatrist, and pharmacist, in addition to her mother, were unaware of the correct procedures (involving prior authorization from the HMO) that would have allowed coverage for the antidepressant.

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