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One of Florida’s largest privately run substance abuse treatment programs has filed two lawsuits that are the first of a possible 150 individual claims against Connecticut General Life Insurance (Cigna) for denying benefits to the program’s patients. In a suit filed in Palm Beach Circuit Court June 5, Boca Raton-based Watershed Treatment Programs Inc., alleges that Philadelphia-based Cigna used its utilization review process to fraudulently induce Watershed into providing services without payment to a Cigna-covered patient. Watershed filed a similar suit two days earlier in Palm Beach County Court over smaller bills to Cigna for care of another patient. Utilization review is the process by which insurance and managed care companies oversee medical treatment of policyholders, deciding which treatments are medically appropriate and covered by the policies. Critics of managed care deride the review panels as bean counters, focused more on controlling costs than providing care. Watershed alleges that Cigna used the bureaucratic complexities of the review process to shuttle the rehab center’s payment requests into a “special investigations unit,” where the bills have remained unpaid for as much as a year and a half. “Cigna kept us jumping through hoops and dribbling out care,” said Watershed corporate counsel Jeffrey Miller, who also represents the company in court. “Their failure to pay is functionally equivalent to accusing us of fraud.” Watershed offers “intensively psychotherapeutic” rehabilitation to approximately 2,500 Floridians annually, according to Watershed vice president Chris Crosby. With 360 employees, the company operates a 58-bed facility in Boca Raton, an 88-bed facility in Delray Beach, Fla., and a 28-bed facility in Clear Lake, Texas, outside of Houston. Cigna is a branch of a 125-year-old, insurance and financial services company. It is a major player in the nation’s managed care arena, including behavioral and mental health services. The company is one of six national health insurance giants named as defendants in a RICO suit in U.S. District Court in Miami. An alliance of state medical associations charges that the companies engaged in a “pattern of racketeering activity” to deny medically necessary care to patients and enrich themselves by underpaying or delaying payments to doctors. Miller said that the alleged behavior in the Watershed suits was “a different face of the same activity” as alleged in the Miami class action. Cigna representatives said the company had yet to retain counsel in the Watershed suits and declined to be interviewed. Watershed’s circuit court claim concerns its treatment of patient “B.D … a person insured by or whose medical insurance benefits were being managed by Cigna, or both,” according to the complaint. The suit alleges that after an October 2001 telephone conference between Watershed medical staff and Cigna utilization review personnel, Cigna authorized Watershed to provide “medically necessary care” to B.D. Attached to Watershed’s claim is a copy of Cigna’s authorization letter of Nov. 29, for 14 days of in-house treatment of B.D. at the rate of $730 a day. The suit alleges that Watershed relied on that authorization and subsequent authorizations for additional treatment, so that it was “reasonably certain that it [was] going to get paid for services rendered.” Watershed charges that Cigna never intended to process its claims for payment. “Cigna intended that Watershed rely on its false representations,” the suit alleges, so that it could stick the treatment center for the cost of fulfilling the insurance company’s fiduciary duty to its insured, B.D. Watershed’s suit in county court contains essentially the same allegations against Cigna, concerning payment for the detoxification and rehabilitation of patient “J.J.” That suit was filed in county court because those bills total less than $15,000. “There’s 150 more cases behind these,” Miller told the Miami Daily Business Review. “They’ve come up with bogus reasons to keep us in a procedural limbo and hang on to their money.” According to Miller, Watershed continued to admit and treat Cigna policyholders — even after payment of some claims was withheld — because Cigna’s special investigation of earlier claims had resulted in mere delay, rather than non-payment in the past. “We weren’t going to cooperate in the denial of care,” Miller said. “Even to patients Cigna considers just a bunch of addicts.” Calls to Cigna’s special investigations unit, which Watershed said handled its claims for payment, were referred to the company’s media relations department, whose personnel declined to discuss Cigna’s review process. The company’s Web site describes its utilization review as a two-part procedure — pre-certification at the beginning of treatment and concurrent review while care is under way. The reviews draw on “many different guidelines” based “solely on sound clinical practice,” according to the site. In an e-mail response to questions about the Watershed suit, Cigna wrote: “We have reviewed the copies of the complaints you provided and are investigating the allegations. It would appear that the provider is arguing that pre-certification is a promise to pay. However, we make pre-certification determinations base on the information provided to us by the providers, subject to all other contractual provisions. If the information proves to be incorrect, or if other contractual requirements are not met, or if the medical records do not support the billing submitted by the provider, we may not pay the claims.” Watershed’s complaints are common to mental health care providers, which are at “the bottom of the food chain” when it comes to reimbursement under managed care, according to Herbert Klein, who publishes a newsletter, Psychotherapy Finances, in Juno Beach, Fla. Insurance companies have “steadily ratcheted down payments for mental health care,” Klein said. “Ten years ago a 28-day stay for treatment was standard. Now there’s generally no in-house care at all except for extreme conditions.” “The carriers aren’t the villains,” Klein cautioned. “They have to work with what employers will pay for coverage of employees.” Klein said that suits over denial of mental health coverage have been filed in several states but had all failed. “They’re either tossed out by judges or become too costly to litigate,” he said. In the Watershed lawsuits, Klein said, prospects for the plaintiffs would depend on the language of individual patients’ insurance policies. “The contracts will determine the flexibility of the provider to proceed with care,” he said.

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