NY State Legislator Pleads Guilty to Selling His Services to Medical Center

We have posted about cases in which hospitals or academic medical centers hired legislators to promote their political agendas. In one case in 2006, a former Rhode Island state legislator pleaded guilty to selling his influence to a local medical center, which submitted to a deferred prosecution agreement, and whose CEO was later convicted of conspiracy and fraud. (This conviction has been appealed.) In another case in 2008, a former New Jersey state legislator was convicted of fraud for selling his influence to a state health care university and academic medical center, which also had been operating under a deferred prosecution agreement.

The latest version of this type of scandal appeared towards the end of last month in the New York Times:

Saying that he knew his 'conduct was illegal and wrong,' a longtime Democratic member of the New York State Assembly, Anthony Seminerio, pleaded guilty on Wednesday to abusing his position by soliciting for himself an amount prosecutors estimated at $500,000.

Federal prosecutors said that for the last decade he traded upon his office, receiving 'corrupt payments' from people or organizations that had business before the state and sometimes threatening those who resisted his requests for money.

The payments were funneled into a company called Marc Consultants that Mr. Seminerio created to hide the income, prosecutors said.

Mr. Seminerio told Judge Naomi Reice Buchwald in Federal District Court in Manhattan that one of the organizations that paid him for wielding his political influence was Jamaica Hospital Medical Center, in Queens. It was the first public mention of Jamaica Hospital, which before the hearing had been referred to in court papers merely as 'a hospital in New York City.'

Appearing before the judge around noon on Wednesday, Mr. Seminerio, unshaven but wearing a blazer and a tie, declared in a firm voice that he was guilty of the charge of honest services fraud. In a brief statement he acknowledged that on July 10, 2008, he 'promoted the interests' of Jamaica Hospital in connection with state business and did not divulge that he had received payments from the hospital.

'My conduct had the effect of depriving others of honest services,' he said. Prosecutors stated that the hospital had paid Marc Consultants about $310,000 and that 'a separate, Medicaid-managed health care plan' affiliated with the hospital paid another $80,000. At the request of hospital officers, prosecutors said, Mr. Seminerio acted as an advocate with legislators and lobbied on their behalf with executive branch officials.

A criminal complaint states that on numerous occasions Mr. Seminerio 'took action in his capacity as a member of the Assembly to benefit the hospital at the same time that he was receiving payments from the hospital.'

The complaint also details recorded conversations in which hospital officials asked Mr. Seminerio to intervene in state budget decisions and in which Mr. Seminerio urged a Health Department official to help Jamaica Hospital take over another hospital.

There once was a time when health care was a calling, and when hospitals were considered charitable organizations which served the sick, and often the poor. Health care professionals and institutions were once held to a higher standard than, say, those who collected the garbage.

Jamaica Hospital Medical Center still proclaims its mission to be:

To serve our patients and the community in a way that is second to none

It is not clear how that squares with "corrupt payments" to a state legislator.

In my humble opinion, for health care to resolve its current crises, it will have to again be held to a higher standard. If we do not challenge the pervasive conflicts of interest within and across health care, and the outright corruption that has infected many health care institutions, none of the proposed manipulations of health care financing will make much of a dent in ever rising costs, declining access, or degrading quality.

But for this to happen, health care professionals and policy leaders will have to acknowledge how low the current standards are. As long as cases like those noted above are mentioned only in the local news media, but are not subjects for polite conversation in professional and policy venues, many will be able to cling to the illusion that things are not so bad.

Post Title → NY State Legislator Pleads Guilty to Selling His Services to Medical Center

Caught in the Cross-Fire: Oxford Pressures Jamaica Hospital to Make Anesthesiologists Sign Contract

From the New York Times, a striking example of a patients and physicians caught in the cross-fire between managed care and a hospital, and of the sort of tactics used by large US managed care organizations these days.

One party to the conflict is Jamaica Hospital Medical Center (in New York City, not the Caribbean), described as serving "a largely poor population with many immigrants and a large number of uninsured patients." The other is Oxford Health Plans, now a subsidiary of UnitedHealthGroup. We have posted, most recently here, (and see links to earlier posts) about the leadership of UnitedHealth, whose CEO, Dr William McGuire, has amassed over $1.6 billion worth of stock options, the timing of the granting of which is currently being investigated by the SEC and a federal grand jury.

Here is the story:

In interviews and court papers, Michael D. Brown, a lawyer for Jamaica, as well as Mr. Rosen and other MediSys officials, gave the following account of the dispute; UnitedHealth and Oxford declined to respond because of the litigation.

Jamaica officials noted that the Oxford moves they object to happened after the July 2004 takeover by UnitedHealth, one of the nation's largest and most profitable health insurers.

In 2004, MediSys and Oxford negotiated new contracts to set the rates the insurer would pay to two MediSys hospitals, Flushing Hospital Medical Center and Jamaica. Oxford drafted the contracts, and MediSys signed them and returned them to Oxford. In each case, based on custom and verbal understanding with Oxford, it was expected that the insurer would sign right away, and that the contract would go into effect the following month.

But after a few months, MediSys realized that Oxford was still paying the old, lower rates, and it complained to the insurer. At that point, Oxford raised a new and unexpected subject: the anesthesiologists at Flushing Hospital.

Those doctors are not Flushing employees, but an independent partnership with an exclusive contract to provide anesthesia services at the hospital — a typical arrangement. The anesthesiology group does not have an agreement with Oxford to be part of its network of doctors. When Oxford members have surgery at Flushing, the anesthesiologists bill the insurance company for their full fees, not the lower rates Oxford would negotiate with in-network doctors.

In late 2004 and early 2005, when MediSys protested that Oxford was not abiding by its new contracts, Oxford responded by asking the hospitals to pressure the Flushing anesthesiologists to join Oxford's network. MediSys rebuffed that request, saying it was up to the anesthesia group to make its own insurance arrangements.

Oxford signed the contract with Jamaica on April 25, 2005 — almost four months after hospital officials thought the contract had gone into effect. But even then, Oxford did not start paying Jamaica the new rates.

On March 27, Mr. Brown received Oxford's first written response to Jamaica's complaints — an e-mail message from a senior vice president at Oxford. The message, included in Jamaica's court papers, was an offer to pay the new rates, both in the future and retroactively, on the condition that the Flushing anesthesia group make a deal with Oxford. MediSys continued to insist that it could not compel those doctors to join Oxford's network.

In early April, doctors and patients received letters from Oxford informing them that as of May 2, Jamaica would no longer be an Oxford provider. Doctors who had admitting privileges at other hospitals were told that they would have to take their patients elsewhere. Doctors who had privileges only at Jamaica were told that they would no longer be paid to treat Oxford members, and their patients were told to find new doctors.

Dr. Alan R. Roth, a family practitioner with many patients at Jamaica Hospital, said he had hundreds of Oxford patients who received such letters.

'A lot of these are low-income, elderly people who have heart disease and diabetes and arthritis, people who see a lot of different specialists, and they were panicked,' he said. 'And all of a sudden, they're told they can't go to all those docs at Jamaica they're used to seeing, who coordinate care with me.'

Jamaica complained to the state, and in April, it sued Oxford in State Supreme Court in Queens. Oxford agreed to keep doing business with Jamaica through Aug. 1.

It appears that UnitedHealth Group, through its Oxford subsidiary, was willing to hold hostage its relationship with Jamaica Hospital, and thus risk that many patients would have to find new doctors and many doctors would have to rearrange their practices, in order to pressure a single anesthesia group into signing a contract with Oxford.

These are apparently the sorts of tactics used by UnitedHealth that inspired UnitedHealth board member (and Columbia University Dean of Nursing) Mary Mundinger to proclaim "We're so luck to have Bill [McGuire]. He's brilliant." However, these tactics seem to conflict with the stated mission of UnitedHealth Group which includes as a goal "to improve access to health and well-being services" and to "simplify the health care experience."

Post Title → Caught in the Cross-Fire: Oxford Pressures Jamaica Hospital to Make Anesthesiologists Sign Contract