Unitedhealthcare Services, Inc., Plaintiff v. Karim A. Paracha, M.D., Long Island Laparoscopic Doctors, John Does 1-10 and ABC Corporations 1-10, Defendants, 070033/2014

Cite as: Unitedhealthcare Services, Inc. v. Paracha, 070033/2014, NYLJ xxxxxx, at *1 (Sup., SUF, Decided September 14, 2015)

070033/2014

Justice Jerry Garguilo

Decided: September 14, 2015

ATTORNEYS

Plaintiff’s Attorney: Connell Foley LLP, New York, NY.

Defendants’ Attorney: Ruskin Moscou Faltischek PC, Uniondale NY.

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The Defendants, Karim A. Paracha, M.D., and Long Island Laparoscopic Doctors, petition the Court by way of motion for an order pursuant to CPLR §§3211(a)(5), (7) and 3016(b) dismissing the Verified Complaint in its entirety. The Plaintiff UnitedHealthcareServices, Inc., opposes the application and cross-petitions for an order pursuant to CPLR §3211(e) permitting the Plaintiff leave to replead in the event the Court grants the Defendants’ motion.

The comprehensive submissions include appropriate Notices by all parties, the Defendants’ Memorandum of Law In Support of Motion to Dismiss; the Defendants’ Reply Memorandum of Law In Further Support of its Motion to Dismiss and In Opposition to Plaintiff’s cross-petition, the Affirmation of Plaintiff’s Counsel In Support of Assignment to the Commercial Division; the Plaintiff’s Reply Memorandum of Law In Support of its Motion for Leave To Replead; Defendants’ Exhibits and Plaintiff’s Exhibits.

As set forth in Plaintiff’s Verified Complaint, it brings this action against the Defendants claiming tortious interference with contractual relations, conspiracy, fraud, negligent misrepresentation, unjust enrichment, and violations of General Business Law §349. Plaintiff also seeks to enjoin the Defendants from engaging in egregious billing practices and to seek a declaration that their billing practices generate fees that are

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unlawful, and well in excess of the reasonable and prevailing rates typically billed for similar services in the same geographic area. Plaintiff seeks to recover damages incurred from 2011 to 2012 exceeding $1.7 million dollars and attorney’s fees incurred as a result of the submission of health insurance claims to Plaintiff in violation of General Business Law §349, the common law, and the regulations which govern the practice of medicine in New York. In short, the Plaintiff seeks disgorgement of excessive fees and consequential damages.

In substance, the Defendants see Plaintiff’s claim as nothing more than a “non-actionable case claiming Plaintiff is suffering from “sour grapes.” The Defendants, non-United participating doctors, were paid for “out-of-network” professional medical services from Plaintiff. United reimbursed Defendants in full for those professional services, and now, “years later” despite having every opportunity to object to the amount of the fees charged by the Defendants, claims that it paid too much. In short, according to the Defendants, the crux of United’s case is that it’s health plan participants either never agreed to the allegedly excessive charges and/or were not advised by the Defendants of those charges.

UnitedHealthcareServices, Inc., is a Minnesota corporation duly authorized to transact business in New York. At all times relevant hereto United, among other things, provided health care benefits and insurance to its participants. United also administers certain self-funded health benefit plans.

The defendant, Dr. Paracha, is a physician duly licensed to practice medicine in New York, maintaining an office in East Setauket, County of Suffolk, New York. Dr. Paracha was affiliated with, and is a principal of the practice known as Long Island Laparoscopic Doctors.

The allegation, which is the root of all of the Plaintiff’s claims, is that the fees charged by the defendants were “excessive.” The Court need only to determine whether or not the claim of excessiveness can withstand the Defendants’ petition.

Virtually all the defendants’ services that are the subject of Plaintiff’s complaint were provided in the scenario of a medical emergency. At such time the patient clearly was in no position to consider Dr. Paracha’s network status and/or negotiate the terms of providing medical care. One cannot imagine a patient writhing in pain in anticipation of emergency surgery and discussing with a clear head the fact that the physician is an out-of-network provider and further negotiate the charges for surgery.

The Court is also mindful that the plaintiff, UnitedHealthcareServices, Inc., is

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astute in determining fair market value of services rendered to its participants. The underlying claims as per an exhibit attached to the Affirmation of Thomas Vecchio, Esq. commenced on October 14, 2011 through October 2, 2014. It puzzles the Court why an adroit healthcare insurer, prior to the institution of this suit, failed to question the submissions and or dispute the same.

The Plaintiff claims that the physician Defendant’s charges for the emergency surgical services rendered were “excessive” when compared to FAIR Health Standards and Medicare guidelines. The parties have educated the Court on the Fair Health Standards purpose. In an actuarial sense Fair Health Standards compiles charges for various medical procedures and submits to the insurance industry the amount it deems “fair” for the services rendered. The Court is also provided with the Medicare guidelines which represent a fraction of the charges noted in the Fair Health Standards. Without doubt, the Plaintiff paid in excess of the suggested fees of the Fair Health Standards.

There is no claim nor is it so that the two standards (Fair Health Standards and Medicare) were and are legally binding upon the Defendants when their charges were submitted.

The issue of “excessive billing” apparently caught the attention of the Legislature. As a result thereof the emergency medical services and “Surprise Bills Law” became effective on March 31, 2015. See NY Fin Serv Law §601 et seq. This law was not in effect at the time the Defendants billed, nor at the time the Defendants filed their motion to dismiss. This legislation sets forth guidelines for the patient, the physician and the healthcare insurer to follow when a non-participating physician renders emergency medical care. The law does not address issues concerning a retro-active adjustment of fees or a clawback of fees that prior thereto were paid in full.

The protocol of the Surprise Bills Law has a dispute resolution procedure (IDR) to determine a reasonable fee. See NY Fin Serv Law §605(2)-(3).

As noted hereinabove the essential allegation supporting Plaintiff’s claim is “excessiveness.” In the absence of a contractually or statutory mandated fee-cap, physicians are at liberty to set their own fees. Conn v. Gabbert, 526 U.S. 286, 291, (1999). The Defendants were not “in network” and thus were not bound by any pre-agreed fee schedule. The Defendants present themselves as out-of-network providers who “set their own fees” without any nefarious side deals.

The Court acknowledges that there are statutory imposed fee schedules for certain medical services such as those found in the No-Fault Law as well as the Workman’s

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Compensation Law. Both statutes set forth maximum permissible charges by providers and during relevant periods.

The Court is aware that the Complaint alleges that the Defendants “routinely conspired to inflate the rates they charged for medical services in order to maximize the amount actually received as reimbursement from United.” However, neither the Complaint or the submissions provide the Court with any reference to any statute, regulation or other legally enforceable standard governing the Defendants and/or settings surrounding the rendition of services. The standards alluded to (Fair Health Standards) do not bind the Defendants herein (out-of-network physicians). It is therefore,

ORDERED ADJUDGED AND DECREED that the Defendants’ petition to dismiss the action is GRANTED. The plaintiff’s cross-petition for leave to replead is DENIED. Any claims for relief not specifically addressed herein are deemed denied.

The foregoing constitutes the decision and ORDER of this Court.

Dated: September 14, 2015