TLPJ Press Release header

For Immediate Release: June 1, 2000
For More Information Contact: TLPJ, 202-797-8600

TLPJ and Team of Consumer Lawyers Sue Five Maryland HMOs for Illegally Double-Billing Members

Cases Challenge Constitutionality of New State Law Retroactively Immunizing HMOs

Trial Lawyers for Public Justice and a team of prominent Maryland consumer rights lawyers filed class action complaints on Wednesday against five HMOs in Maryland State Court for illegally double-billing their members. The defendants are Aetna U.S. Healthcare Inc., Carefirst Blue Cross Blue Shield, Kaiser Foundation Health Plan of the Mid-Atlantic States, Inc., MD-Individual Practice Association, Inc., and Prudential Health Care Plan, Inc. The consumer attorneys joining with TLPJ in the case are Robert K. Jenner of Greenberg & Bederman in Silver Spring, Bruce Plaxen of Plaxen & Adler in Columbia, and Kieron F. Quinn of Quinn, Gordon & Wolff, LLP in Baltimore.

The cases follow a unanimous March 10, 2000 decision by Maryland's highest court in Riemer v. Columbia Medical Plan that HMOs have been illegally billing their members -- in direct violation of the Maryland HMO Act -- by charging them for medical treatment a second time if the members recover compensation for their injuries from a third party. The Riemer case was also filed and argued by TLPJ and this same team of consumer attorneys.

"The Maryland Court of Appeals ruled that HMO's have essentially been overcharging their members by millions," said TLPJ Staff Attorney F. Paul Bland, Jr. "We are filing these cases to make sure that Kaiser, Prudential, and other Maryland HMOs give the money back."

The class action lawsuits involve a practice called subrogation. In a common scenario, an individual is hurt in a car accident and receives medical care from his HMO. He then sues the other driver and recovers money in a settlement or at trial. "In that setting, the Court held that it is illegal for HMOs to demand money from the HMO member's auto accident recovery for what the HMO claims is the value of the medical care it gave its member," explained co-counsel Bruce Plaxen.

"In Riemer, the Court agreed with us that the Maryland HMO Act, which has been on the books since 1984, plainly says that HMOs are not allowed to take this money from their members," added co-counsel Robert K. Jenner. The Court held that charging members for subrogation is contrary to the whole idea of an HMO, which provides pre-paid medical care. "The Court made clear that it was necessary for 'consumer protection' to prohibit HMOs from charging their members a second time for care after the members had already paid a premium for that care," added Jenner.

The new cases will have to address a new hurdle, however, in the form of retroactive legislation passed by the legislature in an effort to protect HMOs and overturn the Riemer decision. The legislation was introduced at the behest of Maryland HMOs and rushed through the legislature in the last few weeks of the session. The Governor signed it on May 18, 2000.

"If the legislature wants to reward its big campaign contributors, the HMOs, it can only do so on a forward-going basis, it can't go back in time to legitimize HMOs illegally taking millions of dollars from injured persons," said Kieron F. Quinn. "In these new cases, we intend to establish that the retroactive provisions of this bill are completely unconstitutional."

Riemer was filed in 1996. The defendant HMO removed the case to federal court, arguing that the Employee Retirement Income Security Act ("ERISA") preempted the Maryland HMO Act. The U.S. District Court in Baltimore held that ERISA did preempt the claims of those members of the Columbia Medical Plan who received their insurance through an ERISA plan (generally health insurance provided to an employee by a private employer) and dismissed those members' claims. The federal court remanded the other class members' claims to state court, however, and the Maryland Court of Appeals ruled for those class members in Riemer.

Plaxen, Jenner, Quinn, and TLPJ have appealed the U.S. District Court's ERISA holding to the U.S. Court of Appeals for the Fourth Circuit. TLPJ's Bland argued the federal appeal in January 1999. The parties await a decision.