PCI Says N.J. Bill Would Open Medical Fraud Loophole

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

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

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

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

Under the bill, a doctor with an interest in a center would have to provide a patient with a written disclosure form before referring them and have a poster disclosing his interest posted conspicuously in his office.

Jennifer Sciortino, a spokesperson for the Senate President's Office, prior to the bill's passage denied that it would prevent action against doctors for improper treatment. She said that civil actions and criminal actions by insurers alleging billing fraud could still be pursued.

The bill, she said, revises the law so that doctors' payments from clinics in which they have an interest would be based on a flat fee, rather than on the volume of patients they send--a practice suspected of engendering kickbacks. "Fraud claims can still go forward," she said.

Mr. Stokes said that despite a posted notice, he thought it would be difficult for a patient to reject a doctor's recommendation to use a particular center.

PCI opposed the bill, which includes a clause that provides a retroactive "carve out" exempting doctors and medical practitioners who made referrals before the measure's passage. PCI said it believes it would mean those who had engaged in deceptive billing practices would still be able to collect on illegally submitted insurance claims.

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

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

(Daniel Hays can be reached at dhays@nuco.com or 201 526-1245.)