Jane Dotson
The medical field is not immune to fraudulent activities, and rogue medics and companies have been known to exploit insurance schemes for their financial gain. From deceptive sales practices to creating shell companies, the impact of such misconduct can be costly, with some insurance companies suffering significant financial losses and patients being put at risk. This has led to legal repercussions, with courts ordering health insurance companies to pay millions in compensation and penalties for deceptive sales schemes that cheated consumers.
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What You'll Learn
- Rogue surgeon Ian Paterson cost the insurance company £20 million
- Medical reporting organisations (MROs) lost MedCo over £1 million
- Health insurance companies were ordered to pay $165 million for deceiving consumers
- Rogue companies suffered a £1 million loss from the MedCo clampdown
- Mr Jeffrey Kivi's insurer paid three-quarters of the higher-priced medication
Rogue surgeon Ian Paterson cost the insurance company £20 million
Rogue surgeon Ian Paterson has cost the NHS £18 million in compensation paid to 256 of his patients, with the total number of claimants expected to exceed 1000. Paterson was jailed for 15 years after being convicted of 17 counts of intentionally wounding his patients. He exaggerated or invented the risk of cancer to persuade people to undergo unnecessary surgery. While the NHS has paid out millions to Paterson's patients, his private patients are still seeking compensation. Paterson's own insurance of £10 million has not yet been revoked, but it is understood to feature a clause excluding cases of criminal negligence. Spire Healthcare, which now owns the private hospitals where Paterson worked, is also facing hundreds of claims for compensation. The Medical Defence Union has refused to cover Paterson for claims lodged after his insurance lapsed.
The case of Ian Paterson highlights a potential gap in clinical indemnity within the independent healthcare sector that does not exist in the NHS. The government is working to ensure that any future changes to indemnity and insurance arrangements will be made using the best evidence base available. The aim is to improve the position for patients when receiving treatment from any regulated healthcare professional and to ensure that patients have confidence in accessing appropriate compensation if harmed while receiving care, including when harm arises from criminal or intentional acts or omissions.
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Medical reporting organisations (MROs) lost MedCo over £1 million
Medical reporting organisations (MROs) lost over £1 million due to a MedCo clampdown. MedCo is a scheme founded and managed by representative bodies including the Law Society, the Association of Personal Injury Lawyers, and the Association of British Insurers. MedCo took steps to suspend 134 registered MROs that appeared to be shell companies set up by existing operational MROs. This practice of creating shell companies was deemed to go against the principles of the system, which was designed to ensure that accredited and independent doctors could be randomly selected by lawyers to diagnose their clients' soft tissue injuries.
The suspension of these MROs resulted in a financial loss for the organisations, as they had already paid their annual fees to MedCo. The updated qualifying criteria implemented by MedCo raised the threshold for MROs seeking eligibility for the scheme, leading to the loss of over £1 million for the affected companies.
It is important to note that MedCo's actions were aimed at maintaining the integrity of the system and ensuring that doctors providing diagnoses were accredited and independent. This clampdown highlights the importance of adhering to the established guidelines and criteria for MROs seeking to participate in the MedCo scheme.
Some MROs, such as MAPS Medical Reporting, have recognised the need to meet the qualifying criteria for MedCo and have invested in rebranding and modernising their image. By doing so, they aim to grow and diversify their client base and showcase their effectiveness as partners in the litigation process. This proactive approach demonstrates a commitment to providing quality services that balance speed, price, and client relationships.
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Health insurance companies were ordered to pay $165 million for deceiving consumers
Three UnitedHealth-owned insurance companies were ordered to pay $165 million in damages to consumers and the state of Massachusetts. The Suffolk Superior Court found that the companies had deceived consumers about their sales agents and the insurance products they were selling. The companies, HealthMarkets, Inc. and its subsidiaries, The Chesapeake Life Insurance Company, and HealthMarkets Insurance Agency, Inc., had misrepresented their sales agents as being objective and representing all insurance carriers. In reality, these agents only sought to sell Chesapeake supplemental health insurance.
The court also found that the defendants had engaged in "widespread misrepresentations" of the supplemental health insurance they sold. They had bundled major medical and supplemental insurance, deceiving consumers into unknowingly buying additional policies. The companies targeted financially vulnerable individuals, tricking them into buying products they didn't need and couldn't afford. As a result, the court ordered them to pay over $50 million in restitution to consumers and $115 million in civil penalties to the Commonwealth.
UnitedHealthcare plans to appeal the decision, with a spokesperson stating that the ruling was "unsupported by the evidence and contrary to established Massachusetts law." However, Massachusetts Attorney General Andrea Joy Campbell hailed the decision as a victory for consumer protection, holding the companies accountable for their deceptive practices.
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Rogue companies suffered a £1 million loss from the MedCo clampdown
The government-operated scheme MedCo suspended 134 registered medical reporting organisations (MROs) that appeared to be shell companies set up by existing operational MROs. The creation of these shell companies was seen as undermining the system's principles, as the scheme was intended to ensure that accredited and independent doctors could be randomly selected by lawyers to diagnose their clients' soft tissue injuries. As a result of the clampdown, rogue companies suffered a loss of £1 million in annual fees paid to MedCo, which were not refunded due to the organisation's 'no refund' policy.
MedCo, a not-for-profit organisation, was founded and is managed by representative bodies including the Law Society, the Association of Personal Injury Lawyers, and the Association of British Insurers. By the end of 2016, MedCo had 1,349 medical experts as registered users, with 1,043 of them having passed the online accreditation course. The organisation recorded a turnover of £5.8 million in 2016, with an operating surplus of £3.8 million, which led to a 23% reduction in registration fees for 2017-2018.
MedCo's annual report also highlighted the disproportionate resources allocated to policing the behaviours of solicitors and MROs, as well as potential breaches of user agreements and the ethics policy. The board confirmed that all MROs would be audited against the revised qualifying criteria by the end of the year.
It is worth noting that there are other organisations with similar names, such as Medco Health Solutions, Inc., which was an American Pharmacy Benefits Management company, and MedCo Technology, which provides safe patient mobilisation solutions.
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Mr Jeffrey Kivi's insurer paid three-quarters of the higher-priced medication
Mr Jeffrey Kivi's insurer paid $100,000 for each of his outpatient infusions, despite the same treatment costing only $19,000 at another hospital nearby. This decision can be attributed to several factors. Firstly, insurers prioritize their own interests, aiming to maintain salaries and investor dividends, and they can compensate for high payouts by increasing premiums, co-payments, or deductibles. NYU, a significant client, may also have influenced the decision, as insurers are reluctant to lose their business.
The case of Mr Kivi's insurer paying three-quarters of the higher-priced medication reflects a broader issue within the healthcare system. The United States spends a significant portion of its gross domestic product on healthcare, and rising medication costs contribute to this. Specialty medications, which treat conditions like cancer, arthritis, hepatitis C, and multiple sclerosis, comprise a small percentage of prescriptions but account for a substantial portion of pharmacy spending. This trend is projected to increase, leading to concerns about the potential financial burden on the healthcare system.
Insurers' payments for high-priced medications have contributed to the increasing costs within the healthcare system. Commercial insurers in the United States pay significantly higher prices for hospitals' and physicians' services compared to public health insurance programs, and these rising prices drive up premiums for commercial health plans. Additionally, insurers have been known to prioritize profits over patients, accepting only younger, healthier patients on whom they can make a profit and offering different levels of protection based on varying rates.
The impact of these practices extends beyond financial concerns. Higher medication prices and the influence of insurers can create barriers to accessing essential treatments, affecting patients' well-being and quality of life. It also raises ethical concerns, as the motivation to maximize profits can overshadow the primary goal of providing care and improving health outcomes.
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Frequently asked questions
Rogue medics have been found to set up shell companies to take advantage of government insurance schemes. For example, in 2016, MedCo suspended 134 registered medical reporting organizations (MROs) that appeared to be shell companies set up by existing operational MROs. This practice allowed them to make millions from insurance schemes.
Mr Ian Paterson, a Consultant Breast Surgeon, was suspended by the General Medical Council (GMC) in 2011 for performing mastectomy procedures on breast cancer patients incorrectly. He was subsequently charged, convicted, and sentenced to 15 years in prison, which was increased to 20 years in the Court of Appeal. Around 750 former patients of Mr Paterson brought claims against Spire Healthcare, resulting in damages and costs of over £37 million.
In 2024, a court in Massachusetts found that several health insurance companies had engaged in a deceptive sales scheme that cheated consumers. The court ordered the companies to pay over $165 million in damages and penalties. The companies had deceived consumers about their sales agents and the insurance products they were selling, falsely advertising that their agents were objective and represented all insurance carriers.
