Opinion ID: 3026402
Heading Depth: 2
Heading Rank: 1

Heading: The Grider Case

Text: This case involves a certified class of approximately 6,000 doctors in Central Pennsylvania who were providers with the Keystone health maintenance organization (“HMO”), which operates exclusively in Central Pennsylvania. These doctors had 5 signed contracts with Keystone to provide medical services to patients who subscribed to the Keystone HMO. To receive reimbursement for services they provided to subscribers, the doctors submitted claims on forms provided by Keystone, using a standardized set of numerical codes provided by the American Medical Association, which are referred to as “CPT codes.” These codes are provided for virtually every medical procedure in order to avoid variations in descriptions given by doctors. Because each code only represents a single procedure, one visit to a doctor may result in a reimbursement claim containing multiple CPT codes. A typical claim form, for instance, may have one code for the office visit itself, and another for the administration of a particular test. During the class period certified by the District Court, when a doctor within Keystone’s network submitted one of these claim forms, it was processed through a company named Synertech, Inc. (“Synertech”). Synertech is located in Central Pennsylvania, and used a proprietary software system owned by Tingley, Inc. to process these claims. In addition to being reimbursed on a fee-for-service basis, many doctors in Keystone’s network also received reimbursements for certain pools of patients ! usually employees of a large employer ! under contractual “capitation” arrangements with Keystone. Approximately 28% of the certified class members in this case are family practice providers, most of whom were under contractual capitation arrangements with Keystone. Under these capitation agreements, doctors are paid a set monthly fee in exchange for providing basic medical services ! such as examinations and 6 treatment for minor illnesses ! to a pool of patients. More complicated medical procedures not on the list of capitation services are supposed to be billed to Keystone and paid on a feefor-service basis. On October 5, 2001, the Plaintiffs in this case filed an action in Pennsylvania state court, which the Defendants promptly removed to the United States District Court for the Eastern District of Pennsylvania. The suit alleges that Keystone violated RICO by not processing and paying claims as it had promised to do in its contracts and other communications with the doctors in its network. According to the Plaintiffs, Keystone used automated systems and software built into Synertech’s computerized claims processing operations to systematically “bundle” two or more CPT codes. By doing so, it would pay for only one procedure, thereby reducing payments to doctors. The Plaintiffs also allege that Keystone used Synertech’s software to systematically “downcode” the doctors’ claims by automatically changing the CPT code on a claim form to a less costly procedure. In terms of the capitation agreements, the Plaintiffs allege that Keystone secretly reduced monthly capitation payments to participating doctors. Specifically, they claim that Keystone “shaved” capitation payments by “secretly: 1) shifting patients off of a doctor’s capitation roster to so-called ‘dummy accounts’ set up by Keystone, whereby doctors continued to treat the insured patient and Keystone continued to collect premiums for medical insurance paid by or on behalf of the member, but retained those premiums for itself instead of paying them to the doctor; and 2) delaying capitation payments to providers for 7 newly enrolled members assigned to that doctor’s capitation roster.” In addition to these claims, the complaint also alleges violations of Pennsylvania’s “prompt pay” statute, which requires insurers to reimburse doctors within forty-five days after receiving a reimbursement claim. On December 21, 2006, following three years of discovery, the District Court certified a class of providers in the Keystone network who were alleged to have been defrauded by the practices described in the complaint. The class includes: All medical service providers in connection with medical services rendered to patients insured by Keystone Health Plan Central Inc. who during the period January 1, 1996 through October 5, 2001: (1) submitted claims for reimbursement on a fee-for-service basis for covered services which claims were denied or reduced through the application of automated edits in the claim processing software used by defendants to process those claims; and/or (2) received less in capitation payments than the provider was entitled through the use and 8 application of automated systems to “shave” capitation payments in the manner alleged in plaintiffs’ Amended Complaint filed October 6, 2001. Grider v. Keystone Health Plan Cent., Inc., No. 2001-CV-05641, 2007 WL 201011,  (E.D. Pa. Jan. 19, 2007). Now that the class is certified, the case appears to be headed towards trial.