Lawyer Makes It His Business to Fight HMOs : Attorneys: Mark Hiepler, who fought Health Net for his late sister and won $89-million verdict, has his own firm.


Last December, Mark Hiepler got the kind of free publicity most lawyers could never hope to buy.

In a David vs. Goliath legal battle that caught national media attention, Hiepler won an $89-million verdict from a Riverside County jury against Health Net, the Woodland Hills-based health maintenance organization that is the second-largest HMO in the state. Hiepler argued that Health Net wrongfully denied a bone marrow transplant to his sister, Nelene Fox, a breast cancer victim who died at age 40 in April, 1993.

Health Net filed a motion for a new trial before reaching a settlement in April with the Fox family for an unstated, but presumably hefty, sum.

Now Hiepler, taking advantage of his sudden celebrity and his share of the Health Net settlement, has set up his own law firm to do battle full time with health insurance companies that refuse to pay for certain medical treatments.


“This is kind of a tribute to my sister,” Hiepler said of his new firm. “And we have a good running start thanks to the Health Net case.”

Hiepler & Hiepler--a partnership between Mark and his wife, Michelle--opened last month in a cramped office on the 15th floor of an Oxnard high-rise. The walls of the new office were still bare last week, and the doors had not been hung, but Hiepler said the firm’s docket had already swelled to 240 cases.

Among them are 160 involving patients denied procedures ranging from kidney transplants to tonsillectomies, as well as two new cases against Health Net. The heavy caseload is not surprising given the surge in patients signing up with HMOs, and the inevitable disputes that arise when patients think their medical needs conflict with the interests of a large medical bureaucracy.

The formation of Heipler’s new law firm has drawn some sniping from the enemy camp. “He’s not the first one out there, won’t be the last one out there, and he’s not the best one out there,” said Lyle Swallow, vice president of legal services with Health Net.


Arthur Southam, chief executive of CareAmerica Health Plans, an HMO in Woodland Hills, said Hiepler “is just another attorney who happened to be involved in a case that got a lot of publicity.”

Nevertheless, Hiepler, 32, is committed to a crusade he started last year when he took on the case of his sister. Health Net denied Fox a $150,000 bone marrow transplant, saying the procedure was experimental and unproven. On her own, Fox obtained a transplant, but she died eight months later.

Hiepler continued the legal fight with Health Net after his sister’s death, and the enormity of the initial award--$12 million in compensatory damages and $77 million in punitive damages--garnered him national attention.

Hiepler was invited last January to the White House, where he says he had a brief discussion with President Clinton about health care issues. He was among 10 finalists for the 1994 Trial Lawyer of the Year Award, presented annually by the Washington, D.C.-based Trial Lawyers for Public Justice. Currently, he and his sister’s family are mulling over 13 offers for a TV movie on the Health Net case.


“It’s a great buzz that you get,” said Hiepler, who often defended insurance companies at an Oxnard law firm where he previously worked. “But it’s so closely related to the worst thing that I’ve ever been through that I don’t get too excited about it.”

Hiepler’s practice, and others like it, could see growing demand as HMOs continue to expand. Health Net, for example, has enrolled 108,350 new members since Jan. 1, bringing its total enrollment to 1.38 million. Such rapid growth is likely to test HMOs’ ability to keep costs in check, and that could trigger more complaints from members.

But the prospect for another $89-million verdict is slim, Hiepler conceded. When a case does end in a jury award or settlement, he gets a percentage. But most cases, he said, are resolved with a letter to the insurance company, and Hiepler collects the $150 hourly rate he charges his clients. Many of his clients are already so financially strapped that he reduces his hourly fee, he said, and in some cases he has waived it altogether.

For that reason, the health insurance area of the practice may never be financially self-sustaining, Hiepler said, and will depend on revenues from other cases it handles, including personal injury suits and construction-defect claims.


Many of Hiepler’s clients were among the hundreds of people who called or wrote him after the Health Net case. Some cases are strikingly similar to that of his sister, including one of his two current cases against Health Net.

Viviana Vander Stoep, 51, a college English instructor in San Diego and a Health Net patient, was diagnosed with breast cancer in July, 1993. Health Net refused to pay for a bone marrow transplant, she said, so she and her husband hired Hiepler, then arranged to pay for the $150,000 operation themselves. She underwent transplant operations in November and January.

Hiepler and the Vander Stoeps said Health Net finally agreed to pay for the operations in January, after the Fox verdict had been rendered. But the dispute has left the Vander Stoeps so angry, they said, that they filed a lawsuit in San Diego County Superior Court on July 14 against the HMO, seeking compensatory and punitive damages.

“If I had not had the transplant, I may have been dead by now,” Vander Stoep said. “Health Net paid for it, but only after a great deal of turmoil, frustration and emotional disgust.”


Health Net spokesman Don Prial said the HMO agreed to pay for the procedure last November, and has not been served with the Vander Stoep lawsuit.

Tugs-of-war between patients and insurers often stem from HMOs’ efforts to control costs by rationing care, Hiepler said. Many HMOs, he said, have set up incentive programs that encourage doctors to refrain from referring patients to specialists, often leading to delays in the diagnosis and treatment of serious health problems.

Insurers bristle at such accusations. Prial acknowledged that HMOs must control costs, but said moral and legal obligations ensure that HMOs offer top-notch care.

“Mark, in his infinite capacity to build up this bogyman, fails to understand that any doctor, any HMO, has a legal and moral responsibility to do things right the first time,” Prial said. “Mark feels there’s this conspiracy going on, and nothing could be further from the truth.”


In another recent case, Hiepler represented the family of Danielle Whelan-Smith, a 5-year-old Oxnard girl who needed her tonsils removed. Hiepler said a simple $800 tonsillectomy was delayed for eight months because the paperwork was mishandled by Foundation Health, an HMO based near Sacramento that serves 200,000 Southern Californians.

Foundation finally approved the girl’s tonsillectomy in May, shortly after Hiepler began working on the case, he said, but by then Danielle had already suffered fevers, throat infections and other problems for months.

“The HMO just kind of lost it among their hundreds of thousands of people,” Hiepler said. “In the meantime, the kid was being tortured.”

A Foundation spokesman said he was unfamiliar with the case and declined to comment.