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Psychologists Sue Managed Care Company Over Termination Practices

Psychologists Sue Managed Care Company Over Termination Practices

In what well may be a first in the managed behavioral health care industry, the New Jersey Psychological Association (NJPA) and seven psychologists filed a lawsuit against MCC Behavioral Care Inc. contesting the firm's utilization of "without cause" termination contract provisions. The case may break new ground in the way managed care companies interact with providers, and may question whether managed care companies can deselect providers despite the potential harm to patients.

The 26-page complaint, originally filed in May in Morris County (N.J.) Superior Court, was removed in July to a federal district court. The NJPA entered the suit on behalf of all its members who have or will be terminated by MCC. The seven individual plaintiffs were among 40 psychologists terminated without cause by MCC about two years ago, said Lorryn Wahler, executive director of the NJPA.

According to the allegations, MCC uses the "without cause" termination provisions of its contract with providers in order to conceal the true reasons for termination. The plaintiffs claim that MCC maintains an "undisclosed set of standards" that it uses to determine whether a practitioner is "managed-care compatible." In implementing this practice, the complaint alleges, the managed care company in effect substitutes its judgment of what is proper mental health care for the judgment of mental health professionals who are responsible for patient care.

"The irony here is that when psychologists sign a contract with MCC or another managed care company, they are obligated by that contract to exercise their clinical judgment," said Barry Mitchell, Psy.D., NJPA president. "When they do exercise their clinical judgment and provide more services than the company wishes to reimburse, they become managed-care incompatible and are terminated... [These] terminations are in fact 'for cause,' but are veiled as 'no cause' terminations by MCC in order to avoid giving these psychologists their due process to fight these terminations."

MCC, based in Eden Prairie, Minn., is a wholly owned subsidiary of Cigna Corp., which provides behavioral health care services to more than 5.5 million people nationwide. Other than to acknowledge that MCC "did terminate contracts with providers approximately two years ago, basically as part of a general reorganization of that and other networks," MCC spokesperson Harold Drescher said, they would have no other comment on the lawsuit until a response was formally filed in court. He did say, however, that the lawsuit would cut to the heart of "the whole issue of selective contracts" as a "means of controlling the costs of operating our provider networks."

One of those costs, said Drescher, includes the expense of meeting provider credentialing requirements mandated by various accreditation organizations, such as the Joint Commission on Accreditation of Healthcare Organizations and the National Committee for Quality Assurance. He said that the criteria by which a decision is made to terminate a practitioner during a network downsizing is the issue that will be litigated.

William F. Maderer, a Newark, N.J., attorney representing the plaintiffs, sees the case as a landmark struggle to determine whether mental health practitioners or the managed care organizations will have control over decisions relating to patient care.

"I'm not sure that whatever role the managed care companies play that it should be to substitute their judgment for the judgment of a health care provider professional who has determined what is appropriate," said Maderer. "If a mental health care provider is diagnosing a certain illness and recommending certain treatment, it's certainly the psychologists' position that it's inappropriate for the managed care company to substitute its judgment."

Ultimately, the lawsuit will focus on other managed care practices that have irritated mental health practitioners for years, including "gag clauses" or practices and utilization review procedures. When invoked, the complaint alleges, patient care suffers and public policy is violated.

"The question is if psychologists know that they will be terminated if they speak too loudly or request a certain type of treatment plan, or if they write down a certain type of diagnosis, then what it's going to do is affect the way psychologists operate not because it's good medicine or good health care, but because that's what it takes to play the game," Maderer said.

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