I just finished a case where a health insurance company, HMO, notified my client, a physician, that it was claiming over-payments to the doctor and that he owed them a very large sum of money.  The notice stated that he had to pay the overcharge within a very short period of time and if he did not the company would file for binding arbitration. Through arbitration, the health insurance company could potentially receive a judgment for all of the money and, per the doctor’s contract with the HMO, collect all legal expenses for the matter. This result could increase the monetary pain to the doctor enormously.

This is a very difficult situation to be in, as the contracts between HMOs and the physician providers are written completely in favor of the HMOs.  The contracts almost always eliminate litigation in the court system and force the issue to an arbitrator.  Also, the contracts usually state that the winning side maybe able to collect all of their attorney’s fees in prosecuting the case.  Since the HMO has teams of lawyers who specialize in this type of practice, they are ready, willing and able to find a physician who is out of compliance with some term in the contract.  The lawyers then determine how much is owed and stand ready to pounce on the physician if payment is not forthcoming.  So, a $50,000.00 claim for overcharges can turn into a payment of $100,000.00, with the addition of another $50,000.00 worth of legal bills.  The contracts are drafted this way to force the physician to pay up as soon as possible to avoid having legal fees put on top of the over-payment claim.  These claims are often paid whether they are legitimate or not just so the case is put to an end.

In my case, I asked the HMO for a copy of the contract at issue because, of course, my client could not find his copy. The company sent it to me and I read it.  I quickly noticed that the page that discussed the arbitration requirement was indeed signed by the HMO but my client had never signed it.  He did sign the agreement at the end of the document, but the arbitration page was not signed.  Therefore, I took the position that the arbitration agreement was not in effect and that the HMO would have to sue the physician in state court for the money.  State court litigation would be lengthy without the ability to obtain legal fees by the winning party, and this was not something the HMO wanted to contemplate.  Also, HMOs are not well loved in the community and thus the decision by the jury might be in favor of the physician.

All of these issues made it so that I was able to settle the entire matter for less than 10% of the claim.

The take away from this is that you have to look at all of the facts in a case to see where you might find some leverage to resolve the matter on favorable terms for your client.