HMO Accuses Rival of Marketing Fraud
United Health Plan has accused a rival HMO of making secret payments to employees of a Los Angeles welfare program to get information about poor mothers and children in a scheme to boost its HMO membership, according to allegations in a recently filed lawsuit.
The suit alleges that sales representatives of Universal Care, a Signal Hill-based health plan, made cash payments and provided other compensation to a supervisor and other employees at WIC offices in Los Angeles to obtain the names and addresses of women and children. WIC, the Special Supplemental Nutrition Program for Women, Infants and Children, is a federally funded nutrition program.
Universal Care, a health plan that has a piece of a huge state contract to coordinate medical services to the poor in Los Angeles County, was hit by marketing fraud charges from state health regulators last year.
The California Department of Health Services, which administers the state’s Medi-Cal medical insurance program, will investigate United Health’s claims, Kenneth Wagstaff, a top Medi-Cal official, said Friday.
In March, the California Department of Health Services slapped Universal Care with a 45-day ban on new enrollment after concluding that a senior manager of the firm had offered San Diego doctors illegal “bounties” of $25 for each patient they enrolled. Universal executives said then that the offer was unauthorized and was immediately withdrawn.
Jay Davis, Universal’s executive vice president, declined to comment on the United Health lawsuit, saying the company had not yet reviewed it.
The suit, filed Jan. 22 in Los Angeles Superior Court, alleges that, in early 1996, Universal Care attempted to increase its HMO membership in Los Angeles County by “making disparaging and untrue” statements about United to persuade Medi-Cal enrollees to switch to Universal.
Besides Universal Care, the suit names as defendants Michael Hersh, a Universal sales representative, and Julio Escobar, a supervisor at a WIC clinic in Watts.
It alleges that Escobar and other unidentified WIC employees provided the names and addresses of WIC beneficiaries to Hersh and other Universal salespeople.
Hersh and Escobar could not be reached for comment.
Universal’s Davis said Hersh has not worked for the company since March.
Laurence Berman, a lawyer for United Health, declined to comment on the suit.
United Health Plan is an HMO run by the nonprofit Watts Health Foundation.
