MH Providers Bring ANTITRUST Suit Against Nine MH Managed Care Groups

By Ken Hausman (Psychiatric News)

Fed up with a system that increasingly interferes with their ability to deliver optimal care, a group of New York psychiatrists and mental health professionals has gone to court to stage a major battle against organizations that manage mental health care for large insurance companies. The plaintiffs filed suit in November charging the nation's nine largest mental health carve-out organizations with a series of antitrust violations that they allege have prevented them from freely practicing their trade. Among the illegal actions with which they charge the managed care companies is conspiring to control the mental health care market through tactics such as price fixing and imposing financial incentives so that providers will deny care to the mentally ill.

The legal challenge is in the form of a class-action suit filed on behalf of every psychiatrist, psychologist, and social worker in the U.S.--about 200,000 individuals--and if completely successful could cost the managed care companies billions of dollars in damages, injunctive relief, and lawyers' fees. Named as defendants are CMG Health, FHC Options, Foundation Health PsychCare Services, Green Springs Health Services, Human Affairs International, Merit Behavioral Care Corp., MCC Behavioral Care, United Behavioral Systems, and Value Behavioral Health. For the last four years, the suit alleges, the "defendants and their co-conspirators determined whether and under what terms" providers of mental illness care would be able to sell their services throughout the United States, by acting in concert to "fix, maintain, and stabilize the professional fees" that psychiatrists, psychologists, and social workers could earn. These tactics violate the Sherman act because the result of this compact is an "unreasonable restraint of trade and commerce," plaintiffs contend. The managed mental health care groups banded together to formulate "a common course of action. . .to perpetuate and maintain the system," according to the suit, in response to what they perceived to be "a growing threat to their way of doing business caused by dissatisfaction among providers, patients, and other members of the public." New York attorney Joseph R. Sahid, who represents the plaintiffs, told Psychiatric News that that psychiatrists and others who dare to challenge care denials by managed care reviewers or question the companies' nonnegotiable pricing schemes find themselves the objects of illegal "boycotts, coercion, and intimidation." The plaintiffs also charge that the companies illegally interfered with competition by devising cost-cutting strategies that have led to the "inappropriate use of short-term mental health care therapy; medication to minimize mental health care therapy; and inexpensive classes of mental health care providers."

On January 10 the defendants filed a motion to dismiss the suit. They maintained that "similar, even identical, conduct in the marketplace by competing firms" is not evidence of a conspiracy. [U.S. District Court for the Southern District of New York, Docket #96 CIV 7798] (Psychiatric News, February 7, 1997)

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