Maxicare Sued by Hawthorne Medical Group : Accused of Misleading Effort to Win Patients
A large medical group that has been providing services to Maxicare Health Plan Inc. members on Thursday sued Maxicare, contending that it shifted 20,000 patients to other doctors through a misleading letter-writing campaign.
In its lawsuit filed in Los Angeles Superior Court, Hawthorne Community Medical Group asked for $50 million in compensatory damages from Maxicare.
Investment analysts played down the effect of the suit on financially troubled Maxicare, the nation’s largest health-maintenance organization. “It’s not surprising,” said Margo L. Vignola, a health-care analyst with Salomon Bros. in New York. “These two will fight each other until the cows come home.”
Ongoing Feud
Hawthorne Community Medical Group’s suit was, in fact, a counterclaim to an earlier suit filed by Maxicare. In the earlier suit, Maxicare charged the medical group with unfair competition and libel.
The suit filed Thursday is the latest twist in a costly and bitter feud between Maxicare and the medical group. In February, the medical group won an $11.9-million arbitration award from Maxicare for underpayments that occurred between 1981 and 1985.
Shortly after the arbitration award, Maxicare cancelled its contract with Hawthorne Community Medical Group effective July 1. The medical group treats 98,000 Maxicare members, who now must either choose new doctors or new health plans.
If those 98,000 people remain with Maxicare, Hawthorne Community Medical Group will lose them as patients. Those patients accounted for half of the medical group’s $63-million revenue last year.
Those members are also important to Maxicare because they represent one-third of its Southern California membership.
In its suit, the medical group contends Maxicare overstepped the rules in trying to keep some of its members. The medical group alleges that Maxicare transferred 20,000 members from the medical group without telling those members that they could stay with Hawthorne Community Medical Group if they quit Maxicare.
Clarifications Ordered
The medical group contended that those transfers were the result of a misleading letter-writing campaign by Maxicare. Hawthorne Community Medical Group said Maxicare sent some of its members letters that told them they “must transfer to a Maxicare Health Center” or other medical provider in the Maxicare system.
In addition, the medical group claims that Maxicare steered new members, and potential patients, away from Hawthorne Community Medical Group. The medical group says it received only 31 Maxicare members as new patients in March and April, compared to an average of 2,000 new patients a month in 1987.
In a statement, Maxicare said it denied the allegations and plans to “vigorously defend itself against the charges.”
However, Maxicare acknowledged that it was ordered in court Wednesday to send “one-time clarifications” to members. The letters will explain that members can continue to receive medical care at Hawthorne Community Medical Center until their “open enrollment period” with their employers, when they must choose a new medical plan or a new doctor.
The clarifications were ordered by Superior Court Judge Robert Weil on Wednesday.
