An insurance trade group representative said today that up to$80 million his industry has spent on investigations to provefraudulent medical treatments would be negated by a bill approvedby New Jersey's legislature last week.

Richard Stokes, regional manager and counsel for PropertyCasualty Insurers Association of America (PCI), said hisorganization is calling on Gov. Jon Corzine to veto the measure,which would permit doctors to send patients to ambulatory surgerycenters in which they have a financial interest.

Mr. Stokes said that for more than 20 years the law has notpermitted such referrals. "Where's the control that says whetherthis treatment may or may not be necessary? It opens the floodgates[for unneeded treatments]," he argued.

He said the bill would interfere with investigations offraudulent treatment that have taken place and the carriers'ability to withhold payments to doctors where fraud wassuspected.

Under the bill, a doctor with an interest in a center would haveto provide a patient with a written disclosure form beforereferring them and have a poster disclosing his interest postedconspicuously in his office.

Jennifer Sciortino, a spokesperson for the Senate President'sOffice, prior to the bill's passage denied that it would preventaction against doctors for improper treatment. She said that civilactions and criminal actions by insurers alleging billing fraudcould still be pursued.

The bill, she said, revises the law so that doctors' paymentsfrom clinics in which they have an interest would be based on aflat fee, rather than on the volume of patients they send--apractice suspected of engendering kickbacks. "Fraud claims canstill go forward," she said.

Mr. Stokes said that despite a posted notice, he thought itwould be difficult for a patient to reject a doctor'srecommendation to use a particular center.

PCI opposed the bill, which includes a clause that provides aretroactive "carve out" exempting doctors and medical practitionerswho made referrals before the measure's passage. PCI said itbelieves it would mean those who had engaged in deceptive billingpractices would still be able to collect on illegally submittedinsurance claims.

"If these illegally submitted claims were paid, it would befinancially devastating to New Jersey motorists who pay for autoinsurance and to those companies that insure them," said Mr.Stokes.

"We are asking Gov. Corzine to stop this legislation, whichundermines efforts to control overutilization of medical services,"said Mr. Stokes. "His veto will prevent doctors who have abused aloophole in the law to advance their own financial interests to thedetriment of patients, consumers and the health care deliverysystem as a whole."

(Daniel Hays can be reached at [email protected] or 201526-1245.)