Health Insurance Plan of Greater New York has allegedly defrauded Brookdale University Hospital and Medical Center out of millions of dollars since 2001, according to a lawsuit filed by the hospital April 9.

The hospitals attorney, Michael Brown, estimated the loss to be as much as $80 million.

The complaint, which was filed with the U.S. District Court for the Eastern District of New York, alleges that the carrier violated the U.S. Racketeer Influenced and Corrupt Organization (RICO) Act by systematically denying coverage to in-patients illegally for years.

David P. Rosen, CEO of Brookdale, explained that physicians were placed in the hospital in 2001 " with admitting privileges " by HIPs partner, Cogent Healthcare, to treat patients and to help them navigate the hospital and HIP administrative procedures. The complaint states that Cogent implemented a utilization monitoring program. Utilization review is the process that determines whether a service, procedure, or treatment is medically necessary.

But, Rosen alleged, the physicians instead used their role to deny claims without regard for the patients conditions or well-beings in a racketeering scheme aimed at defrauding the hospital out of millions of dollars.

A spokesperson for Cogent, Anne Hancock, said in a prepared statement that the accusations are without merit. She also said, Importantly, we do not make coverage or payment decisions in this arrangement. All reimbursement decisions are handled exclusively by Brookdale and HIP. Also, per our contract with HIP, we do not take part in utilization review, as the lawsuit alleges.

Cogent would provide no additional comments on its role in Brookdale and referred inquiries to the prepared statement. Cogent would similarly not discuss its relationship with HIP. The hospitals complaint alleges that Cogent, initially an independent contractor hired by HIP, joined the carriers enterprise in 2001 and thus created a conflict of interest for its physicians.

Insurance Department Not Contacted

A spokesperson for HIP, Pat Smith, said the hospital was looking to distract attention from its own financial distress and possible mismanagement by suing the carrier.

HIP also said that if there had been improper denials, the hospital should have contacted the New York State Insurance Department years ago to resolve the matter, which the carrier said the hospital did not do.

A spokesperson for the department, David Neustadt, said that the department did not have any records of complaints from Brookdale about HIP from the past five years.

Rosen responded, I dont want to pick and choose which agency should be doing what, whether its the Health Department, the Insurance Department; the attorney general. We made a complaint and the regulators can parse it out as they see fit.

A Brookdale source familiar with the complaint said that although individuals were aware of the problem, it was not until late last year that the hospital began formally analyzing the incidence of HIP coverage denials. The source said it was at that point that a pervasive and extensive problem became fully evident.

Specific Complaints

Speaking to specific examples of inappropriate coverage denials in the complaint, Brookdale said that HIP refused to cover one gravely ill womans stay in the hospital caused by a malignant brain tumor on the grounds that the stay was not medically necessary according to the standards of treating infectious diseases. Brain tumors, however, are not caused by infections. When the hospital appealed, HIP agreed to pay for two of the eight days the woman stayed in the hospital, during which she suffered multiple complications, according to the lawsuit.

HIPs extensive and medically unjustifiable denials of coverage means that Brookdale Hospital loses one dollar out of every five that HIP should pay us for the care we provide to its members, Rosen said. He also said that HIPs denial rate for claims was 22 percent in 2006. He said that other HMOs typically deny fewer than five percent of his hospitals claims.

HIP said that it would not comment on specific examples of inappropriate coverage denials outlined in the complaint, citing the pending litigation as the reason. But the carrier said, in a prepared statement, that Brookdale could have terminated its relationship with HIP at any time if there had been a problem. HIP also said that the hospital commenced the action without any warning in order to obtain extra contractual payments from the carrier.

Prior History

HIP faced a similar complaint in August 2001, when the carrier and five other HMOs in the state were fined for violations committed in the first half of 1999. HIP paid a $165,000 fine at that time. Although HIP did not admit to any wrongdoing in the matter, the carrier signed an assurance of discontinuance " an agreement, with the attorney general, to not commit the violations in the future.

A deputy press secretary in the Attorney Generals Office, Rashmi Vasisht, said that she did not believe her offices Health Care Bureau received any other related complaints about HIPs practices during or since the two-year monitoring period that followed the agreement.

The case is scheduled for an initial conference in the District Court on August 1.