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By Ken Hausman
Fed up with a system that increasingly interferes with their ability to deliver optimal care, a group of New York psychiatrists and mental health professionals has gone to court to stage a major battle against organizations that manage mental health care for large insurance companies.
The plaintiffs filed suit in November charging the nation's nine largest mental health carve-out organizations with a series of antitrust violations that they allege have prevented them from freely practicing their trade. Among the illegal actions with which they charge the managed care companies is conspiring to control the mental health care market through tactics such as price fixing and imposing financial incentives so that providers will deny care to the mentally ill.
The legal challenge is in the form of a class-action suit filed on behalf of every psychiatrist, psychologist, and social worker in the U.S.--about 200,000 individuals--and if completely successful could cost the managed care companies billions of dollars in damages, injunctive relief, and lawyers' fees.
Named as defendants are CMG Health, FHC Options, Foundation Health PsychCare Services, Green Springs Health Services, Human Affairs International, Merit Behavioral Care Corp., MCC Behavioral Care, United Behavioral Systems, and Value Behavioral Health.
The suit, which has been filed with the U.S. District Court for the Southern District of New York and assigned to Judge Kimba Wood, accuses the companies of violating the Sherman Antitrust Act by forming a nationwide cartel whose goal is to maximize profits by ensuring that patients receive as little treatment for mental illnesses as possible. The suit alleges that clinicians suffer financial consequences if they attempt to provide care that they judge to be crucial but the managed care company considers unnecessary.
For the last four years, the suit alleges, the "defendants and their co-conspirators determined whether and under what terms" providers of mental illness care would be able to sell their services throughout the United States, by acting in concert to "fix, maintain, and stabilize the professional fees" that psychiatrists, psychologists, and social workers could earn. These tactics violate the Sherman act because the result of this compact is an "unreasonable restraint of trade and commerce," plaintiffs contend.
The managed mental health care groups banded together to formulate "a common course of action. . .to perpetuate and maintain the system," according to the suit, in response to what they perceived to be "a growing threat to their way of doing business caused by dissatisfaction among providers, patients, and other members of the public."
New York attorney Joseph R. Sahid, who represents the plaintiffs, told Psychiatric News that "when given a choice between profit and patient care, these companies have chosen profit, resulting in pain and suffering for millions of patients denied proper treatment and more than $11 billion in financial losses to mental health professionals."
He added that psychiatrists and others who dare to challenge care denials by managed care reviewers or question the companies' nonnegotiable pricing schemes find themselves the objects of illegal "boycotts, coercion, and intimidation."
The plaintiffs also charge that the companies illegally interfered with competition by devising cost-cutting strategies that have led to the "inappropriate use of short-term mental health care therapy; medication to minimize mental health care therapy; and inexpensive classes of mental health care providers."
According to the complaint, the suit's primary aim is "to stop the defendants from profiting from the misery they are causing so many people who are currently being denied access to health care services they need so desperately." It seeks treble damages and injunctive relief for the individuals filing suit and for all clinicians who have treated patients whose care was managed by the nine defendant companies in the four years preceding the complaint.
Two psychiatrists are among the 11 plaintiffs--Edward M. Stephens, M.D., of New York City and Jos‚ A. Yaryura-Tobias, M.D., of Great Neck, N.Y. Both are in private practice.
Stephens told Psychiatric News that he was motivated to file this suit after "a decade of watching the specialty I love come under horrendous attack by the 'managed denial' industry and no one devising an adequate method for dealing with it."
The managed behavioral health industry has engaged in criminal activities, Stephens insisted, "as part of a well-orchestrated plot to eliminate specialists. Psychiatrists are being replaced by family practitioners unqualified to do the specialized work we do, and by the lowest-paid professionals the managed care organizations can find."
So far one APA district branch--the New Jersey Psychiatric Association--has joined the suit, though Sahid said that discussions about participation are under way in other district branches and at the national level. The Long Island branch of the psychologists' association has also signed on to the suit, as has the American Association of Private Practice Psychiatrists.
M. Nicolai Nielsen, M.D., president of the New Jersey Psychiatric Association, told Psychiatric News that when he presented the notion of joining the suit to the district branch executive council, he was met with "an emotional and enthusiastic wave of support." He added that it turned out to be the least controversial issue with which they had dealt in years.
The impassioned response that greeted his proposal, however, did not mean that district branch leaders had no concerns about it, Nielsen said. Some were worried about retaliation by the managed care companies named as defendants, while others were anxious about possible countersuits by the companies. In addition, the district branch's attorney told the leaders that he believed that the kind of remedy they were hoping to attain through the lawsuit would be better achieved through the legislative route. Nielsen maintained, though, that the two avenues for reform were "not mutually exclusive" and vowed that the organization would pursue both.
At the national level, the APA Board of Trustees discussed the matter in a closed-door session and agreed that the suit is a worthwhile and potentially valuable weapon in the managed care war. The Trustees chose to delay a decision about APA participation until they had additional information about it, said APA President Harold Eist, M.D. A decision is expected this month.
Eist stressed that the suit "certainly seems meritorious, and if managed care companies have engaged in antitrust breaches, they deserve to be prosecuted to the fullest extent of the law."
On January 10 the defendants filed a motion to dismiss the suit, claiming that it lacked specificity and that no facts in the plaintiffs' suit "permit a reasonable inference that the defendants' conduct in the market can best be explained by concerted action rather than the self-interested forces of competition," thus rendering the conspiracy allegations "patently defective." They maintained that "similar, even identical, conduct in the marketplace by competing firms" is not evidence of a conspiracy.
Stephens emphasized, however, that as long as managed care companies operate and compete by selling care at the lowest price, regardless of whether they have to sacrifice effective treatments in the process, there is no expectation that they will develop "an ethical model of care." The solution to this problem is to put them out of business, he said, and he hopes this lawsuit will be the strongest nail in their coffin.
[U.S. District Court for the Southern District of New York, Docket #96 CIV 7798] (Psychiatric News, February 7, 1997)