Bloomberg News

UnitedHealth Units to Pay $24 Million in Hepatitis Case

April 04, 2013

Two UnitedHealth Group Inc. (UNH:US) units must pay $24 million in damages for failing to properly monitor a doctor who gave two colonoscopy patients hepatitis C by employing substandard medical practices, a Nevada jury ruled.

Jurors in state court in Las Vegas deliberated about five hours over two days before finding officials of Health Plan of Nevada and Sierra Health Services were negligent in their oversight of Dipak Desai. The former gastroenterologist has been blamed for infecting patients with hepatitis C by reusing vials of the anesthetic Propofol and failing to sterilize equipment.

The panel ordered the two UnitedHealth units to pay $15 million in compensatory damages to Bonnie Brunson and her husband and $9 million to Helen Meyer. The two women contend they got hepatitis during colonoscopy procedures at Desai’s clinic. Their lawyers said earlier in the case they may ask the jury to award more than $1 billion in punitive damages.

The verdict reflects “what’s wrong with health insurance companies in the U.S.” Robert Eglet, Brunson’s lawyer, said in an interview after the verdict was announced. “They put profit before patient safety.”

The trial is the first against units of Minnetonka, Minnesota-based UnitedHealth over the 2007 hepatitis C outbreak. Nevada officials were forced to notify 50,000 patients they may have contracted the potentially fatal blood disease from Desai’s actions.

‘Dangerous Precedent’

UnitedHealth officials said the verdict “sets a dangerous precedent” because it holds insurers responsible for individual doctors’ misdeeds.

“We are disappointed, but not surprised, by this verdict given the volumes of essential evidence the jury was blocked from hearing during this trial,” Tyler Mason, a UnitedHealth spokesman, said in an e-mailed statement.

Health Plan of Nevada officials said on a website created to provide information about the trial that Brunson’s and Meyer’s cases were “driven only by attorney greed.”

Nevada juries already have handed down multimillion-dollar punitive awards against Teva Pharmaceutical Industries Ltd. (TEVA), which made the Propofol used by Desai. Three juries awarded colonoscopy patients more than $750 million in punitive damages over the drugmaker’s decision to sell the anesthetic in oversized vials that could be reused.

Teva, based in Petach Tikva, Israel, agreed last year to pay $250 million to settle more than 80 lawsuits over Propofol sales.

April 22 Trial

Desai, 62, and two nurse anesthetists face second-degree murder charges over the death of a colonoscopy patient. The former doctor also faces federal fraud charges. Desai is set to go to trial April 22 on charges filed by state prosecutors.

Jurors found today the UnitedHealth units were negligent for failing to properly monitor Desai’s performance and “acted in bad faith.” That means the companies are potentially subject to punitive damages.

The panel will hear evidence on the insurers’ earnings tomorrow, Will Kemp, Meyer’s lawyer, said in an interview. The women’s lawyers said earlier in the case that they will ask jurors to award $1 billion in punishment damages.

“I will be asking for the largest verdict ever in Southern Nevada,” Eglet said after the jury’s ruling on compensatory damages was announced.

Quality Reviews

Meyer and Brunson sued under a Nevada law requiring HMOs to file annual reports showing officials reviewed the quality of health services provided to their members.

The women’s lawyers argued officials of the UnitedHealth units knew Desai had a reputation for sloppy practice before giving him a contract to handle colonoscopies and then didn’t check the quality of his work. At one point, Desai was a member of Nevada’s Board of Medical Examiners, which oversees the licensing of doctors in the state.

The plaintiffs contend the insurer didn’t properly monitor Desai’s practices and procedures even though they received complaints about his practices.

During the trial, witnesses said Desai adopted a cavalier attitude toward patient safety, speeding through procedures so he could see as many as 20 patients in a three-hour period.

The women’s lawyers argued the insurers’ executives had an obligation to insure Desai was providing quality care to their HMO members and were required to vet his practices before hiring him.

The UnitedHealth units’ executives “consciously disregarded patient safety by contracting with inferior doctors, so that the companies could make hundreds of millions more dollars,” Eglet said in closing arguments in the case.

Defense Blocked?

Lawyers for the UnitedHealth units argued in court papers that health insurers shouldn’t be responsible for providing full-time monitoring of physicians hired as part of an HMO network. Health Plan of Nevada said Desai had been credentialed at several Nevada hospitals when it hired him.

The companies’ attorneys also complained in court filings that Judge Timothy Williams wrongfully prevented them from putting on their full defense to the women’s claims.

The UnitedHealth units sought to show that administrators followed established practices when vetting doctors for their networks, but Williams refused to allow jurors to hear that evidence.

The insurers also contend Williams erred in excluding files showing Nevada officials who inspected Desai’s clinic “never uncovered any evidence of supposed wrongdoing” at the facility.

“Jurors were unable to make a fully informed decision on the case because plaintiffs’ attorneys prevented basic information from being heard throughout the trial that would have given them a more complete picture of how HPN was not responsible” for the hepatitis injuries, Mason said in today’s statement.

The case is Meyer v. Health Plan of Nevada Inc., A5837999 (Consolidated), Clark County District Court (Las Vegas).

To contact the reporters on this story: Valerie Miller in Las Vegas at valeriemusicmagic@yahoo.com; Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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