BET YOU CAN'T TOP THIS HMO HORROR STORY

At around 7 a.m. on last June 12, Leonardo "Lenny" Belmonte jumped out of bed, his heart galloping. A stranger was pounding on his front door, the knocks booming into Belmonte's Teaneck (N.J.) home in a violent staccato.

Belmonte opened the door, still shuffling in his pajamas. A court constable loomed in front of him, waving a judge's order to seize his property. Two police cruisers and a tow truck idled in front of his house, and a Jeep Cherokee blocked his driveway, where Belmonte keeps his red, 1995 Ford Thunderbird. The court officer issued an ultimatum, Belmonte recounts: "He said, 'If you don't give me your keys, I'm going to break into your car and take it.'"

A dazed Belmonte eventually complied, and watched his Thunderbird disappear down the block on its way to an impoundment lot. "My neighbors were watching, everyone was watching. I was so embarrassed," says the 55-year-old Belmonte, who recently took an early retirement package from his job in the securities database group at J.P. Morgan in Manhattan.

The wake-up call was the humiliating denouement of a three-year odyssey to square a $1,682 hospital bill that, incredibly enough, Belmonte never owed. That basic fact got lost inside a tangle of health-care bureaucracy involving Aetna/US Healthcare, Belmonte's HMO, and Englewood Hospital in Englewood, N.J. The HMO repeatedly told Belmonte that all his bills were -- or would be -- paid before eventually settling the balance after 38 months. What finally moved it to action, though, was an unwitting authorization by the hospital's lawyers to have Belmonte's car carted away despite his protests that Aetna, not he, was responsible for paying the bill. "It's not right what they've done to me," fumes Belmonte, who got his car back the next day, but only after making heated demands to the hospital's lawyers.

At a time of radical upheaval in the health-care industry, Belmonte's story shows just how easily individual consumers can be squeezed between lumbering bureaucracies. And as HMOs and hospitals escalate their squabbles over payment rates and procedures, individual patients may soon find themselves refereeing the behemoths' battles. How hard is it to make a pair of elephants dance? "I just feel frustrated," says Belmonte. "They should be working together. You don't give problems like this to your clients."

Increasingly, however, that may happen. The already tense relationship between hospitals and HMOs "is likely to get worse, as the HMOs are increasingly in financial difficulty," observes Gerard Anderson, director of the Johns Hopkins Center for Hospital Finance & Management. As HMO enrollments slow and costs rise, once-flush managed-care companies have come down with a financial flu. Morgan Stanley's index of HMO stocks has dropped more than 18% since Jan. 1, as the S&P 500 has risen 1%. "The HMOs don't have the money that they used to have, so it's a natural reaction to push back the [payment] dates a little longer," adds Anderson.

Lenny Belmonte also stumbled into another much-obscured but important realm of the health-care business: collections. Hospitals provided $18 billion worth of uncompensated care in 1996, according to the American Hospital Assn. That pumped up the average hospital's collection portfolio from $7.9 million in 1995 to $14.4 million in 1996, according to the American Collectors Assn, a group representing third-party collectors. Typically, hospitals will pursue claims on their own for a few months and turn them over to third-party agencies. Once claims go to court, however, the responsibility reverts back to the hospital. That's what happened when Englewood brought the $1,682 case against Lenny Belmonte -- and wound up with his Thunderbird.

Michael P. Reilly, chairman of the Healthcare Services Program for the American Collectors Assn., says he had never heard of a hospital taking a patient's car. "That just doesn't make sense," he says. "It's not standard."

Indeed, agrees Englewood Hospital's chief financial officer, Douglas Duchak, very little in the collections Belmonte case was done by the book. Typically, a hospital will seek a judgment against a debtor and then have the court place a lien against a bank account or a piece of property. Usually, the hospital specifically tells court officers not to seize personal property. With the Belmontes, however, the hospital's attorney never gave that instruction to the court, Duchak says. "In my 15 years as CFO, I've never heard of taking somebody's car. It came as a shock to me.... It's extraordinary."

Belmonte's barrage of bad luck began in May, 1995, when his wife, Laraine, fainted at a local supermarket. She was rushed to Englewood Hospital -- one of two area hospitals affiliated with Belmonte's health plan -- and was admitted for high-blood pressure and a minor heart ailment. Laraine was discharged after only one day, and the Belmontes regarded her fainting as an unfortunate but ultimately harmless incident. They were further comforted because Lenny Belmonte's health plan would cover all costs beyond a $50 co-payment. (Lenny was the primary registrant on his health plan, so all hospital correspondence and later collections letters were addressed to him.)

When the "yards-long" hospital invoices came a few week later, the Belmontes thought little of it. Belmonte simply shipped the bills off to Aetna/US Healthcare. "They said 'we'll take care of it,'" he recalls. And just two weeks after Laraine's hospitalization, Aetna paid Englewood $2,488.95, according to Aetna's records.

Six months went by, Belmonte recalls, and then the calls started. The phone rang around dinner time, on Sunday evenings, and at seven in the morning. It was Englewood Hospital, not-so-gently requesting payment for $1,682 in outstanding bills related to Laraine's illness. Belmonte couldn't understand why the hospital was hounding him: "I checked with my insurance company again, and again they said I didn't owe anything," he says.

Aetna's assurances didn't stop the deluge, however. By December, 1996, the bills had been turned over to a collection agency, which issued a standard stream of letters and telephone calls. Again, Belmonte turned to Aetna, which as he recalls, sent him a letter "saying the bill was satisfied and the patient's portion was zero." The hospital's response to this news? "Nothing," says Belmonte

Why weren't the hospital and the HMO able to communicate? Even now, Englewood and Aetna can't agree on what happened. "This is one of those hospital-HMO horror stories we read about," concedes Englewood's Duchak.

By the hospital's account, Aetna/US Healthcare simply did not pay part of Laraine Belmonte's bill. "It's happening more and more," says Duchak. "HMOs are finding ways to not pay." Further, he says, Englewood was right to refer the bill to a collection agency, because it had no other choice. "Hospitals and doctors get so frustrated that they bill the patients," says Duchak, who admits that the practice turns patients into bill collectors, because they in turn badger the HMOs. That means the HMOs "are getting it from two sides," Duchak adds.

Aetna contends that the problem was initially caused because Englewood Hospital heaped on charges to Laraine Belmonte's final bill after Aetna had already paid the claim. "The member went through a very unfortunate situation that was very unfair," says Aetna spokesperson Jill Griffith. "When we were made aware of the problem, we paid them, but it was several years later."

The situation dragged on for so long, Griffith adds, because Belmonte failed to adequately remind Aetna about the status of the account. That's a contention Lenny Belmonte contests, saying that he either spoke or wrote to the company at least a dozen times. Belmonte refers specifically to a letter and collections statement he sent Aetna in December, 1996. Upon seeing a copy of the letter, Griffith noted that Belmonte did not include his member ID number. "Sometimes we get stuff that's hard to decipher. It could be that several members who have his same name are on the system." Aetna is hoping that a new system of electronically submitted claims will help reduce paperwork snafus. The system is now rolling out in New Jersey, and Griffith predicts that payments processed through the "E-Pay" apparatus will be handled within 15 days.

The debt collectors kept after the Belmontes, and by last January had referred the hospital's claim to a lawyer, Warren K. Stadtmauer of Garfield, N.J., who took the case to court. After receiving a summons to appear, Lenny Belmonte says he called Aetna in a frenzy -- and received a familiar response. "They said 'we'll take care of it.'" Trusting that Aetna would do so -- especially given the high-stakes consequences -- Belmonte failed to attend the hearing.

By spring, posters began appearing around the Belmontes' neigborhood, announcing the imminent sale of the couple's assets. Again, the couple says, they called Aetna's customer-service line and the hospital's billing department. At one point, Belmonte says, he even convened the two parties over a three-way conference call. Yet that had no effect either. And by June 12 of this year, the collections-process had reached its final stage. That's when the court officer banged on the Belmontes' front door, demanding the car keys. "We made phone calls and did everything we could," says Laraine Belmonte. "But no matter what we did, nobody would listen to us."

Bureaucratic mix-ups aren't unlikely in a field where incompatible computer systems, errant paperwork, and layers of health-related regulation can bog down, and eventually halt, basic clerical tasks. When told of the Belmontes' case, however, healthcare observers says it's notable for its duration and intensity. "I can't imagine that they couldn't come to terms after three years," says Richard Gundling, technical director of the Health Care Financial Management Assn. "The key is to keep the patient informed. If you make someone mad, they're less likely to pay."

"Where I've seen these types of instances, there is a lack of understanding from several players," adds Bea Greever-Clements, director of medical management at St. Francis Physician Hospital Organization in Hartford, Conn. "Patients don't know how to push [a complaint] up the ladder. They are probably the least informed.... There are times when [hospitals and insurers] take advantage of it."

Johns Hopkins' Anderson argues that patients should not be stuck mending fences between HMOs and hospitals. He says it's not only unfair to the deductible-paying consumer, but that it's also unrealistic. "You, the consumer, should not have to become an expert in insurance law or payment issues. That's not appropriate...You're never going to understand it."

Lenny Belmonte concedes that he didn't pursue his complaint as efficiently as he should have. As he called Aetna's toll-free line over the years, he spoke to several different customer representatives, instead of taking his gripes to the same manager each time. And he says he would have appeared for his court date, had he known it would lead to his car being whisked way. He says, though, that he never expected things to get that far.

Neither did Englewood CFO Duchak. "The individual [who seized the car] was one of the more aggressive people in the business," he adds. "He came and knocked on the door and took the car. Once our collection attorney heard about it, he ordered it returned." The Bergen Co. (N.J.) court constable in charge of the case, Eric X. Fields, would not return repeated telephone calls. But "I apologize for taking the car," Duchak says.

Lenny Belmonte says he can't yet forget the image of a stranger driving away in his Thunderbird. "I'm still very, very, angry, and I think the embarrassment is what's really hurting me right now." That, and the realization that none of it needed to happen. "When you call the 800 numbers, they always say this is being recorded to ensure quality service," he says, chuckling. "That's a joke."

By Dennis Berman in New York