A.G. Schneiderman Uncovers And Stops Wrongful Medical Claim Processing That Overcharged Consumers

NEW YORK – Attorney General Eric T. Schneiderman announced today two agreements to stop improper billing and claims practices in the health care industry. The agreements are with Group Health Inc. (“GHI”), a major health insurance company with well over one million customers in New York State and New York Medical & Diagnostic Center, Inc. (NYMDC), a twenty-provider group in New York City. Pursuant to the settlements, the parties are required to cease unlawful activity and refund patients up to $500,000. These cases arose after consumers turned to the Attorney General's Health Care Bureau for help. In both cases, the consumers followed the rules of their insurance coverage yet were hit with unexpected doctor bills, most of which should have been covered.

"Unexpected medical bills are a devastating problem for New Yorkers. Insurance companies and health care providers must be held accountable for violating the law and overcharging patients," Attorney General Schneiderman said. "Plans and providers must take care to abide by the terms of their policies and contracts, and not exacerbate the already significant financial burdens consumers face in getting the health care they need. At a time when legitimate medical bills are already an extraordinary burden on New Yorkers, improper billing and claims practices are even more deplorable.”

In the GHI case, its health insurance policy was required to cover certain key medical providers, who might be out-of-network -- including anesthesiologists, pathologists, and radiologists -- at a higher rate and with no member cost-share. But despite this requirement, GHI processed claims at its standard out-of-network rate which led to patients being billed for covered physician services -- sometimes in amounts reaching thousands of dollars -- when they should have been shielded from any expense.

In the case of NYMDC, the multi-specialty health care provider was billing patients the difference between NYMDC's charge and the payment by the patient's health plan, despite the fact that NYMDC, as a participating provider with the health plan, was required to accept the plan's payment as payment in full. This practice, known as "balance billing," is prohibited by New York law and the provider's contractual obligations.

Under the terms of the agreement with GHI, the insurance company will send reimbursement checks to affected members. Because of the Attorney General's investigation, GHI has already returned $162,000 to New York consumers and that number is expected to approach $500,000 in restitution for three years of claims. GHI will retain an auditor to ensure all eligible members are given refunds. In addition to providing reimbursement to eligible members, the agreement provides that GHI train its employees, pay a penalty, and assist consumers with resolving any debt collection activity.

NYMDC will send refunds to affected patients who were improperly billed for services that were covered by their health insurance plans. NYMDC will retain an auditor to ensure all eligible consumers are given refunds, and notices will be sent to patients. Further, NYMDC shall ensure that all collection activities cease, and patients' credit standing is restored to good order. In addition to providing reimbursement, the agreement provides that NYMDC reforms its practices, train its employees, and pay a penalty.

GHI is part of Emblem Health, and provides insurance to consumers to 28 counties across New York State. NYMDC is a medical practice located in Kew Gardens, Queens.

Consumers who believe they may have been treated unfairly by a health care provider or health plan should call the Attorney General’s Health Care Helpline at 800-428-9071.

The cases were handled by Assistant Attorney General Carol Hunt of the Health Care Bureau, under the supervision of Health Care Bureau Chief Lisa Landau and Executive Deputy Attorney General for Social Justice Janet Sabel.