Neurological Surgery Practice of Long Island PLLC (Neurological Surgery) sued Empire Healthchoice HMO Inc. and Empire Healthchoice Assurance Inc. (together, Empire) on Wednesday, accusing the defendants of imposing “shockingly low” reimbursement rates which are allegedly “fake and manipulated.” According to the Eastern District of New York complaint, Empire, one of the largest managed care organizations and health plans in the New York metropolitan area, and subsidiary of Anthem Inc., has intentionally strangled the freestanding neurosurgery practice for its own financial gain.
The complaint explained that Neurological Surgery’s physicians perform procedures at hospitals and other healthcare facilities in New York City and in surrounding boroughs. By definition, the complaint said, the care provided is costly because it is “labor intensive, requires substantial expertise, and is high risk.” Reportedly, many of the plaintiff’s patients receive health insurance coverage from Empire.
The complaint alleged that some of Empire’s reimbursement rates have declined as much as 90% from $1 to 10¢. Unlike hospitals, however, which receive and use an additional $14 in ancillary reimbursement for each $1 in direct reimbursement for neurosurgery care, the plaintiff and other freestanding neurosurgery practices are “forced to pay ever-increasing costs out of the 10¢ of direct reimbursement.”
Thus, the plaintiff purported, while hospitals can accept this reduced rate because they still receive the ancillary reimbursement to help defray the high costs of neurosurgery, the plaintiff cannot. The complaint claimed that Empire’s practice is anticompetitive because it will eliminate freestanding neurosurgery practices, reducing competition and patient choice.
While lowering its reimbursement rates, the filing claimed, Empire has simultaneously demanded premium increases from its commercial customers in excess of 15% while its revenues have skyrocketed. According to the complaint, Empire’s parent, Anthem Inc., reported operating revenue of $31.5 billion in the fourth quarter of 2020, an increase of $4.4 billion, or 16.2%, from the fourth quarter of 2019.
The complaint contended that Empire exercises market power in both the relevant product and geographic markets, and that, in combination with unnamed co-conspirators, has unreasonably restrained trade in violation of the Sherman Act and New York law. Neurological Surgery seeks declaratory and injunctive relief, treble damages, and its attorneys’ fees and costs.
Notably, this action follows a suit filed by the same plaintiff in late March against health insurer Cigna for unpaid and underpaid claims in violation of the Employee Retirement Income Security Act of 1974 (ERISA) and for breach of contract. In both suits, Neurological Surgery is represented by Harris Beach PLLC.
