Case Seeks to Put HMO Payment System on Trial : Medicine: Jury will be asked to decide if cost-conscious policies motivated medical office to delay woman from seeing specialist.

Cancer killed Joyce Ching. But her husband claims that greed was an accomplice.

In one of the first known cases of its kind, a Ventura County jury will be asked to decide if the cost-conscious policies of managed care motivated a Simi Valley medical office to keep the ailing Ching from seeing an expensive specialist for months.

A jury will be picked Wednesday and opening statements could start Thursday. The trial is expected to last two weeks.

Industry analysts, along with the national media, are expected to keep close watch on the proceedings. The outcome could be precedent-setting, putting the HMO system of paying doctors on trial alongside Drs. Elvin Gaines and Dan Engeberg of Simi Valley Family Practice.

“This case is significant,” said Joel W. Hay, a USC health economist and expert on health insurance reform. “It’s the kind of thing we will see a lot more of.”

Through their attorney, Michael D. Gonzales of Los Angeles, Gains and Engeberg have denied any wrongdoing. They did not send Ching to a specialist or order tests sooner because her symptoms, age and medical history led them to believe that cancer was unlikely, according to Gonzales’ court papers.

The two doctors are caring people and the allegations against them are unfounded in fact, Gonzales has said.

Unlike other cases that have attacked individual decisions by HMOs, Ching’s case questions the entire system on which much of managed care is based.

That system that Ching’s attorney, Mark O. Hiepler, hopes a jury will condemn is called capitation.

With capitation, HMOs pay primary-care physicians a flat fee for each patient they sign up for the insurance company. The doctors are paid the same monthly fee whether or not they see the patient that month. In addition, the doctors draw from a pool of money to send the patients to specialists or for hospital visits. Money from that pool that is unused at the end of the year goes to the physicians.

“The fewer patients a physician refers to a hospital or special tests, the more profit the physician makes,” the suit alleges.

Hiepler said this system motivated Gaines and Engeberg to reject Ching’s request to be seen by a specialist until it was too late.

Hiepler said the Metropolitan Life HMO--which is not named in the suit--paid the Simi Valley medical office $26.94 a month for Gaines to act as Joyce Ching’s primary-care physician. Whether she visited the office 10 times a month or never made an office visit over the same period, Metropolitan Life still paid the clinic for Ching.

“As such, [Gaines and Engeberg] are financially incentivized to see their patients as little as possible,” the suit states. “The fewer patients who are referred to specialists, the greater the profits.”

USC’s Hay agreed that the HMO system of capitation is severely flawed and said insurance companies are doing little to change the way they do business.

Hay said he hoped that the Ching case would have an impact on managed-care policies, but acknowledged that health-care firms have so far resisted change.

“There [are] more and more pressures to ratchet down costs,” he said. “Things are going to get a lot worse before it gets better. This suit doesn’t surprise me.”

Joyce Ching’s medical problems that led to the suit began a little more than three years ago. On Aug. 14, 1992, Ching went to Gaines, her family’s primary-care physician, complaining of persistent and severe abdominal and pelvic pain.

After the first visit, Gaines sent her home with a bottle of Motrin and refused for 2 1/2 months to send her to a specialist, the wrongful-death suit alleges.

In October, 1992, after her husband, Dave Ching, refused to leave the office unless she was referred to a specialist, Gaines ordered a barium enema X-ray exam and referred her to a specialist, Hiepler said.

Joyce Ching was found to have colon cancer on Oct. 30, 1992. She died in April, 1994, at age 34. Dave and his 4-year-old son, Justin, left their Simi Valley home soon afterward and relocated to Northern California.

Dave Ching claims that had his wife’s condition been diagnosed when she first visited Gaines’ office, she would have had a much better chance of survival.

Hiepler contends that the doctors should have revealed their “economic disincentive to properly treat her or refer her to an appropriate specialist.”

Hiepler claims that the doctors had a financial conflict of interest and placed profit above medical treatment.

Lawyers for the Simi Valley doctors have filed two separate motions that essentially ask a judge to throw out the capitation argument. The first motion argues that the case is nothing more than a run-of-the-mill medical malpractice suit and should be tried accordingly. California law limits medical malpractice awards to $250,000.

The second motion asks that the capitation argument be excluded from the trial and heard separately later.

Ventura County Superior Court Judge Ken W. Riley will rule on the motions Tuesday. He will also preside over the trial.

Hiepler, who made his legal mark winning an $89-million award from an HMO that treated his sister, said he hoped that the trial would change the way managed-care firms operate.

“It’s the first case of its kind, ever,” Hiepler said. “It’s an important one for patients in the HMO system.”