Nevada Jury: Health Insurers Owe ER Doctors $60M in Damages | January 2022

January 2022 | Issue 13, Volume 6

Read the full article from ABC News.

According to the article, one of the largest U.S. health insurance companies and its branches in Nevada were found liable recently for $60 million in punitive damages for underpaying out-of-network emergency medical providers.

A state court jury said three plaintiffs headed by urgent care staffing service TeamHealth should each receive shares of $20 million from Connecticut-based United Healthcare Insurance Co. and five subsidiaries, including the two dominant providers in the Las Vegas area: Sierra Health and Life Insurance Co., and Health Plan of Nevada Inc.

“They were able to get away with this until now,” plaintiffs’ attorney John Zavitsanos told the eight jurors who last week awarded $2.65 million in compensatory damages to plaintiffs Fremont Emergency Services (Mandavia) Ltd., Team Physicians of Nevada-Mandavia PC, and the parent company of Ruby Crest Emergency Medicine.

Appeals are expected. Daniel Polsenberg, a Las Vegas attorney representing defendants, asked Clark County District Court Judge Nancy Allf to schedule post-verdict hearings. No dates were immediately set.

Although attorneys were prohibited in court from telling the jury who might end up paying monetary damages, a company statement after the verdict suggested the costs could be passed to others.

“Everyone agrees health care costs too much, and today’s decision only adds to the problem," said the statement, provided by Dustin Clark, communications vice president for parent company United Healthcare.

“We will be appealing this decision immediately in order to protect our customers and members from private equity-backed physician staffing companies who demand unreasonable and anticompetitive rates for their services and drive up the cost of care for everyone,” the statement said.

Zavitsanos and Houston-based law partner Joseph Ahmad had asked for punitive damages of between $100 million and $1 billion from United Healthcare. They characterized the parent company, UnitedHealth Group, as a “Fortune 5” member, among the largest businesses in the nation.

“The only thing they understand is money,” Zavitsanos said, as he called for jurors to send a message that defendants also including United Healthcare Insurance Co., United Health Care Services Inc., and UMR Inc. harmed doctors, anesthesiologists, and nurses.

Dr. Scott Scherr, emergency department director at Sunrise Hospital & Medical Center in Las Vegas and regional medical director of TeamHealth, testified during the month-long trial. He expressed relief after the verdicts.

“A jury of my peers realized the value of emergency medicine in Nevada,” said Scherr, who headed trauma teams treating critically injured victims after the deadliest mass shooting in modern U.S. history in October 2017 at a Las Vegas Strip concert. Fifty-eight people died that night; hundreds were injured.

“I hope this sends a message to United Healthcare about the importance of our frontline workers,” Scherr said.

In emergency rooms, where patients cannot by law be turned away, attending medical care providers treating sore throats, broken ankles, heart attacks, and gunshot wounds may not be covered by patients' insurance plans.

Testimony showed that United Healthcare cut reimbursements to out-of-network providers by more than half from 2017 to 2020 — from $528 to $246.

“For too long United just thought they could do whatever they wanted,” Zavatsanos said after the jury was dismissed. “Despite enormous efforts by TeamHealth to have legislators and people in the industry listen, it took eight ordinary citizens to hopefully bring about more change than anything that has been done to date."

He added: “This today is a victory for all of the frontline heroes in Nevada, front-line emergency room workers, physician assistants, and nurse practitioners.”

In court, attorney K Lee Blalack II, representing defendants, reminded jurors that the compensatory damages award they reached with their November 29 liability verdict represented about one-fourth of the $10.4 million in disputed billing charges at the heart of the breach-of-contact case.

“My clients heard you loud and clear,” he said, adding that he hoped the jury would conduct an equally careful analysis. Jurors deliberated for about two hours.

Conceding that punitive damages were on the table, Blalack called $5.5 million a “reasonable sum” for what he said amounted to “a payment dispute between big companies.”

More than that would be “monstrous,” “unjust” and represent “an obscene windfall for the largest ER staffing company in the country,” Blalack said, referring to Tennessee-based TeamHealth.

The civil lawsuit was filed in April 2019 by Fremont and the two other groups representing out-of-network providers at hospitals in and around Las Vegas, and in the rural Nevada cities of Fallon and Elko.

Rebecca Paradise, United Healthcare’s senior vice president for an out-of-network payment strategy, underwent intense and repetitive questioning by Ahmed on Tuesday about the effect of the verdict on her company.

In more than an hour of testimony, Paradise refused to specify any changes administrators might make to billing practices based on a verdict she called “impactful” but said had been reached only a week ago.

United Healthcare has tens of millions of insurance policyholders in the U.S.

“I’m not saying I agree or disagree. The verdict is the verdict,” Paradise said. “We believe we are paying fair and reasonable rates. The jury found otherwise in this case and we will have to evaluate that. We need to understand what that means going forward.”

Ahmed showed the jury that while cutting reimbursement rates, the insurer reaped billions of dollars in profits and bought back stock shares, driving up prices for company executives and shareholders.

Wayne Dolcefino, a Houston-based media consultant and former journalist who closely monitored the Nevada trial, said he was aware of similar reimbursement lawsuits pending in states including Arizona, Florida, New Jersey, New York, Oklahoma, Pennsylvania, and Texas.

Discussion Questions

1. As the article indicates, the jury, in this case, awarded $2.65 million in compensatory damages to plaintiffs Fremont Emergency Services (Mandavia) Ltd., Team Physicians of Nevada-Mandavia PC, and the parent company of Ruby Crest Emergency Medicine. What are compensatory damages?
   
   Compensatory damages are damages designed to compensate the plaintiff for the actual loss he or she sustained because of the defendant’s wrongful actions.
   
   According to findlaw.com:
   
   “(Compensatory damages can include) nearly anything. If the person who brought the lawsuit (known as the ‘plaintiff’) was physically injured, compensatory damages could include his medical bills, the pay he missed from taking too many sick days, and pay he will lose in the future from a reduced capacity to work. Also, many courts will consider many different types of injuries. For example, if the plaintiff was badly frightened and suffered nightmares, increased blood pressure, or other anxiety-related symptoms which prevented him from working or fully enjoying his life, he could seek damages for ‘emotional distress.’ If any of his property was damaged, compensatory damages could also include the cost of any repairs or the value of any property that was destroyed.
2. As the article indicates, the plaintiffs, in this case, were awarded $60 million in punitive damages. What are punitive damages, and how do punitive damages differ from compensatory damages?
   
   Punitive damages are designed to compensate the plaintiff for damages resulting from clearly egregious behavior by the defendant; namely, an intentional act (or a grossly negligent or an extremely reckless act that rises to the level of an intentional act) that causes harm to the plaintiff.
   
   In terms of the distinction between punitive damages and compensatory damages, according to findlaw.com:
   
   “Punitive damages seek to punish the person for their wrongdoing. In contrast, compensatory damages are intended simply to pay the person who was injured.”
3. As the article indicates, attorneys, in this case, were prohibited in court from telling the jury who might end up paying monetary damages, and after the verdict, United Health Care suggested that the costs associated with the verdict might be passed on to its customers and members. In your reasoned opinion, should the jury be allowed to hear this information in court before it deliberates a verdict? Why or why not?
   
   This is an opinion question, so student responses may vary. Traditionally, courts have prohibited jurors from hearing this kind of information due to concerns that their decision (i.e., verdict) would be impacted by it. For the same reason, jurors are prohibited from hearing that a defendant (for example a defendant in an automobile accident case) has insurance that will cover some, most, or all the verdict. This is based on a concern that if jurors hear that insurance is involved, they will have no problem “passing on” the costs associated with a case to a “nameless, faceless” insurance company.