TeamHealth wins $60 mln in underpayment suit against UnitedHealthcare

The corporate logo of the UnitedHealth Group appears on the side of one of their office buildings in Santa Ana, California, U.S., April 13, 2020. REUTERS/Mike Blake/File Photo
  • TeamHealth claims insurer drastically underpaid for emergency care
  • UnitedHealthcare says it will appeal

(Reuters) - A jury in Nevada state court on Tuesday ordered UnitedHealthcare Inc to pay physician outsourcing company TeamHealth Inc $60 million in punitive damages after finding that it had underpaid TeamHealth affiliates for emergency care.

The same jury last month awarded TeamHealth $2.65 million in compensatory damages after siding with the company in a trial. TeamHealth had accused the Minnesota-based insurance giant of "drastic" underpayments for emergency room services provided to UnitedHealthcare beneficiaries, reimbursing as little as 20% of what they billed.

TeamHealth chief executive officer Leif Murphy called Tuesday's award "a critical precedent that large health insurers can't underpay frontline doctors for lifesaving care."

"We will be appealing this decision immediately in order to protect our customers and members from private equity-backed physician staffing companies who demand egregious and anticompetitive rates for their services and drive up the cost of care for everyone," UnitedHealthcare said in a statement.

TeamHealth was acquired by private equity firm Blackstone Group LP in 2017.

Courts have frequently reduced punitive damages that are much larger than compensatory damages. The U.S. Supreme Court has held that in most cases, punitive damages should not exceed a single-digit multiple of compensatory damages.

In its 2019 lawsuit, TeamHealth said UnitedHealthcare justified its underpayments as stemming from its "Shared Savings" program. The insurer has described the program as a way to protect patients from surprise bills from out-of-network providers who treat them in emergency settings, a practice known as balance billing.

TeamHealth, however, has said that while its Nevada affiliates were not in-network with UnitedHealthcare, they never engaged in balance billing.

Separately, UnitedHealthcare in October sued TeamHealth in Knoxville, Tennessee federal court, accusing it of billing for more expensive care than it actually provided – a practice known as upcoding – to the tune of more than $100 million. TeamHealth has not formally responded to that lawsuit, though Murphy in a statement at the time called it "frivolous."

The case is Fremont Emergency Services (Mandavia) v. UnitedHealth Group Inc, Nevada 8th Judicial District Court, No. A-19-792978-B.

For TeamHealth: John Zavitsanos of Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing

For UnitedHealthcare: Lee Blalack of O'Melveny & Myers

Read more:

UnitedHealthcare underpaid TeamHealth providers - Nevada jury

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Brendan Pierson reports on product liability litigation and on all areas of health care law. He can be reached at brendan.pierson@thomsonreuters.com.