Insurance Company Paid “Secret” Bonuses to Insurance Brokers

The case revolves around allegations by Mercy that Aultman ‘bribed’ brokers with extra payments – in some cases, as large as $1 million – to persuade employer groups to switch to Aultman’s insurance plans, AultCare and McKinley Life Insurance.These payments weren’t disclosed to the brokers’ clients or on federal tax forms that non-profits must fill out to maintain their tax-exempt status, lawyers told jurors in court.
The March 14, 2013 Akron Beacon Journal print edition highlights what I am sure Mercy Medical Center hopes is the end of a long legal battle with Aultman Health Foundation.
Cheryl Powell writes in “High court throws out appeal by Aultman” highlights the Ohio Supreme Courts dismissal of Aultman’s suit brought in regards to a 2010 court ruling that Aultman pay Mercy $6.1 million for unfair business practices.
A review of that legal action can be found on this Health Care Renewal post.
The legal battle centers on ‘secret ´bonuses paid to select brokers for switching employers from other insurance plans to Aultman’s insurance company, AultCare.
Aultman Hospital is AultCare’s only in-network hospital in Canton.’
It is important to remember that AultCare is an aggressive for-profit insurance company.
At the end of the two-month trial in Stark County Common Please Court, jurors decided Aultman should pay Mercy more than $6.1 million in damages for engaging n a pattern of corrupt activity by influencing brokers with money.
‘Evidence during the trial showed that for a period of time, brokers weren’t allowed to disclose the payments to anyone, even the clients they represented.
Aultman officials have said the confidentiality requirement was dropped in 2004, well before Mercy filed its lawsuit.
We see an all too familiar behavior pattern: someone sensing that he or she is about to be caught drops an activity and then feigns innocence for our past transgressions. How often have we seen a drug company sign a consent agreement only then to return to court to sigh another consent agreement? How often are we told that an activity was committed by a low level sales person and that person is no longer with the company?
Aultman has continued to criticize the case Mercy filed, calling it a waste of resource for the non-profit health-care organizations.
‘We have always felt that this case was not positive for our community, that resources were shifted in a way that was not beneficial to the community’ [the attorney representing Aultman, Allen] Schulman said. ‘I don’t think that it serves the community well.’
[ Mercy President and Chief Executive Thomas] Cecconi said Mercy felt an obligation to fight Aultman’s business practices for the community’s sake.
Once again we find the use of the legal system perverted by one party in an effort to gain a business advantage over another entity.
Aultman has used its non-profit status to shield the activities of a for-profit insurance subsidiary.  Perhaps someone thought that no one would sue a large non-profit hospital for the actions of the subsidiary.
Aultman used the tired old refrain that “we don’t do that anymore” as a defense for past business practices that garnered questionable profits. This after the fact admission does not absolve them of responsibility for those actions.
When all else fails Aultman uses the appeal that it reflects badly on the community. It really does not matter that they were the ones who engaged in this activity. Additionally they make the claim this will result in a decline in resources available when they profited from the original activity.
These are old concepts to HCR readers. The use of the legal system, from law suits being filed against those who would blow the whistle, to grinding out appeals to bleed a person or organization dry, all in an effort to protect a questionable or even illegal activity. In this case there is still the issue of Mercy’s legal fees involved in Aultman’s appeal.
Smaller markets are seeing a consolidation of hospitals and medical practices. The opportunity for one party to take advantage of this is growing as patients and doctors are presented with limited opportunities to seek appropriate medical care. When the hospital owns the insurance company, and your care will be dictated by the policy available through only one company, the opportunity for abuse has to be acknowledged.
Mercy has begun to grow again by offering the community a less corporate medical experience. Interestingly, Mercy and Aultman have collaborated on securing scarce oncology drugs. It appears some doctors still feel it is about caring for the patient, and less about loyalty to a corporate logo.
Steve Lucas