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Maryland HMO Must Pay for Illegally Double-Billing Its Members

Proof of Damages Complicated by Columbia Medical Plan’s Widespread Destruction of Evidence

In an important victory for consumers’ rights, the Circuit Court of Howard County, Maryland recently ruled in Riemer v. Columbia Medical Plan that a Maryland HMO must repay its members for illegally double-billing them. The HMO members’ task of proving their damages, however, will be complicated because Columbia Medical Plan (CMP) recently admitted that it has destroyed much of the evidence of its wrongdoing.

Trial Lawyers for Public Justice (TLPJ) and a team of consumer lawyers filed the class action lawsuit in 1996, challenging the Maryland HMO’s practice of double-billing its members whenever they recover damages from a third party (also known as "subrogation"). Judge James B. Dudley’s two-page order dated May 28, 2003 denied all of CMP’s defenses in the case, ensuring that the HMO will be held liable for its illegal double charges to hundreds, if not thousands, of consumers.

Martin Wolf Martin Wolf

"Columbia Medical Plan has done all it could to delay and derail this case for seven years, but it has now reached the end of the line," said Martin Wolf of Baltimore’s Quinn, Gordon & Wolf. "By denying all of the HMO’s defenses, the Court has effectively ordered the HMO to repay all the money that it illegally picked from its members’ pockets."

The Court must now determine the amount that the HMO owes its members. That determination will not be easy, given the newly exposed fact that CMP destroyed most of the evidence of its double-billing. Mr. Jeffrey S. Joy, the man designated by CMP as the person most knowledgeable about its subrogation practices, testified in an April 2, 2003 deposition that CMP has destroyed computer records and all hard copies of the databases containing most of its subrogation records. CMP destroyed these documents years after this case was filed, and after it had received discovery requests for the documents.

"When Columbia Medical Plan’s members demanded in court that the HMO produce their subrogation records, the HMO simply tossed the computers in the dumpster," said co-counsel Bruce Plaxen of Plaxen and Adler in Columbia, Maryland. "They claim that no backup records are available. We will urge the Court to crack down on the HMO, so it doesn’t benefit from its illegal and unethical practices."

CMP’s destruction of evidence is consistent with its tactics for avoiding liability in this case. Rather than repay its members what they are owed, CMP has fought this case in the courts and in the state legislature.

On March 10, 2000, the Maryland Court of Appeals unanimously ruled in Riemer that CMP had been illegally billing their members – in violation of the Maryland HMO Act – by charging them a second time for medical care whenever the members recovered damage awards from third parties. The Court ruled that since the HMO is a "prepaid plan," it was illegal for CMP to seek to recover any payment other than premiums, deductibles, and co-payments.

In response to TLPJ’s victory in Riemer, HMO lobbyists convinced the Maryland legislature to quickly push through legislation that would retroactively allow HMOs to pursue subrogation claims against their members as far back as 24 years. TLPJ and its legal team then challenged this retroactive legislation, and on August 30, 2002, in the consolidated case of Dua v. Comcast/Harvey v. Kaiser, Maryland’s Court of Appeals held that the new law’s retroactive application was unconstitutional.

In addition to Wolf and Plaxen, TLPJ’s legal team on Riemer includes lead counsel Kieron F. Quinn of Quinn, Gordon & Wolf, Robert K. Jenner of Janet, Willoughby, Gershon & Jenner in Baltimore, and TLPJ’s F. Paul Bland, Jr. and Power-Cotchett Fellow Kerry-Ann Powell. The Court’s order in Riemer, and TLPJ's brief with the court records establishing the destruction of evidence, are posted on TLPJ’s web site, www.tlpj.org.