Complaint

    v.

MAGELLAN BEHAVIORAL HEALTH, HIGHMARK BLUE CROSS AND BLUE SHIELD and GREENSPRING HEALTH SERVICES,

     v.

MAGELLAN BEHAVIORAL HEALTH,
HIGHMARK BLUE CROSS AND BLUE
SHIELD and GREENSPRING HEALTH
SERVICES,

          Defendant.

     v.

MAGELLAN BEHAVIORAL HEALTH,
HIGHMARK BLUE CROSS AND BLUE
SHIELD and GREENSPRING HEALTH
SERVICES,

          Defendant.

     AND NOW, comes the Plaintiff, Daniel S. Shrager, M.D., by and through his attorneys, Ray F. Middleman and Malone, Larchuk & Middleman, P.C., and files the within Complaint as follows:

1. Plaintiff, Daniel S. Shrager, M.D., is an adult individual and a medical doctor licensed to practice medicine in the Commonwealth of Pennsylvania and a board certified psychiatrist.
2. Dr. Shrager practices psychiatry in Western Pennsylvania and his primary office is located at 5750 Center Avenue, Suite 390, Pittsburgh, Pennsylvania 15026. He has built and maintained a broad based psychiatric practice in the Shadyside area of Pittsburgh over the last 25 years.
3. The Defendant, Magellan Behavior Health ("Magellan"), is a Delaware corporation doing business in the Commonwealth of Pennsylvania with corporate offices located at 7168 Columbia Gateway Drive, Suite C, Columbia, Maryland 21046.
4. Defendant, Highmark Blue Cross and Blue Shield ("Highmark"), is a Delaware corporation doing business in the Commonwealth of Pennsylvania with a corporate address at Fifth Avenue Place, 120 Fifth Avenue, Suite 445, Pittsburgh, PA 15222-3099.
5. Defendant, Greenspring Health Services ("Greenspring"), is a Delaware corporation doing business in the Commonwealth of Pennsylvania with a corporate address at P.O. Box 3100, Columbia, MD 21045. It is believed that Greenspring is a wholly owned subsidiary of Magellan and is controlled by Magellan.
6. Highmark provides health insurance including insurance for psychiatric care to a substantial number of people in the area of Allegheny County and surroundings counties
7. Highmark has contracted Magellan and Greenspring to arrange for the provision of mental health and/or substance abuse treatment services to Highmark members. Magellan and Greenspring acts as a third party administrator for Highmark.
8. Providers of psychiatric services to Highmark members are not paid by Highmark unless Magellan approves payment.
9. Highmark has retained Magellan, in part, to reduce the costs of medical services provided to the plan beneficiaries. The primary means Highmark and Magellan use to achieve this cost reduction is by reducing the amount of psychiatric services the Highmark beneficiaries receive.
10. Magellan and Highmark are able to accomplish this because Magellan has, in effect, controlled a substantial number of insured psychiatric patients. Plaintiff believes more than 40% of the insured psychiatric patients in Plaintiff's geographic area are insured under plans that are administered by Magellan.
11. The agreement between Magellan and Highmark leaves it to Magellan to accept or reject psychiatrists as psychiatric services providers.
12. In order for providers such as Dr. Shrager to receive compensation from Highmark for treating Highmark members, the providers must enter into provider agreements with Magellan and/or Greenspring and be accepted or "credentialed" by Magellan.
13. This arrangement has the effect that when Magellan rejects a psychiatrist as a credentialed mental health care provider, a very large part of the market for insured psychiatric patients becomes unavailable to that psychiatrist. In addition, serious and chronically ill patients whose care is now managed by Magellan and who have been followed for many years by the same psychiatrist, such as Dr. Shrager, become unable to continue with their doctor of long standing if he has been "decredentialed."
14. Magellan's control over the market for insured psychiatric patients allows Magellan to dictate instructions to the providers of psychiatric services and to pressure them to reduce the amount of patient care provided.
15. As part of its effort to control providers and to reduce the amount charged for psychiatric care, Magellan demands that providers permit a review of their records prior to Magellan's "recredentialing" of the provider. Accessing treatment records allows Magellan to evaluate the methods of the psychiatric care provider on the issue of the quantity of patient care.
16. Magellan provides no guidelines, method, or criteria to its health care providers for such a "records review."
17. Psychiatric patient care records are privileged under 42 Pa. C.S.A. §5944 and pursuant to 55 Pa. Code §5100.34, and a psychiatrist has no authority to release them to any party absent a proper written patient authorization, specific to the use for which the records are sought.
18. Magellan has the market power to cripple a provider's practice by "decredentialing" the provider; categorizing the psychiatrist as an unacceptable provider and refusing to arrange for any new patients and/or refusing to authorize any future payment for the provider's services to existing insured psychiatric patients. Denying payment for existing patients may force those patients to sever the relationship with their current psychiatrist and could be severely destructive to their emotional well being.
19. This "decredentialing" furthers Magellan and Highmark's desire to control the type and amount of psychiatric services provided in the geographic area.
20. Such a circumstance is economically beneficial to psychiatric care insurers, such as Highmark, and their administrators, such as Magellan.
21. Dr. Shrager contracted with Greenspring, at Greenspring's inception, and was immediately accepted as a "credentialed" provider of psychiatric services. Dr. Shrager has been credentialed for nine years and Dr. Shrager has never before been requested to turn over confidential patient records.
22. The Greenspring provider handbook states as follows:
    

    Credentialing – Greenspring network providers are required
    to participate in our credentialing program. Our national network
    development department is the primary source for communicating
    credentialing requirements and your status within our network.
    
    									
    
    Provider selection and credentialing is initiated through the
    provider application process. As an applicant, you are asked
    to submit the necessary documents so that your credentialing
    review can be expedited. These documents include:
    		Copies of licenses
    		Copies of certifications
    		Documentation of education and training
    		Professional references
    		Malpractice insurance information
    									
    
    When the administrative aspects of the credentialing process
    are complete, the Professional Provider Review Committee (PPRC)
    makes a final determination for inclusion in the provider
    network. Each Local Operating Unit (LOU) has a PPRC. The PPRC
    consists of the medical director, clinical director, care
    managers and network providers, all of whom are licensed
    physicians. Providers in states where there is not a
    Greenspring LOU or reviewed by Greenspring national PPRC.
    

23. Many years after Greenspring's acceptance of Dr. Shrager as a psychiatric care provider, Greenspring became an affiliate of Magellan. Thereafter, Magellan and Dr. Shrager agreed to an amendment of the contract which provided, inter alia, as follows:
    

    Subject to all applicable statutes and regulations governing
    confidentiality of medical records: (i) Greenspring and payer
    shall have the right at times reasonably acceptable to provider,
    to review member records, to determine compliance with
    Greenspring policies and procedures, with providers obligations
    under this addendum, and with providers other obligations
    hereunder and, if necessary to process claims submitted by
    provider;
                            				…
    Provider agrees to comply with all state and federal
    confidentiality requirements and the applicable confidentiality
    provisions in Greenspring's policies and procedures.
    

24. The applicable Pennsylvania confidentiality requirements with respect to psychiatric records forbids a psychiatrist from providing those records to any party except the patient. The psychiatrist's confidentiality requirement can be released only by the execution of a specific written authorization by the patient allowing the psychiatrist to disclose the records.
25. Following his receipt of a contract amendment in March, 2000, Dr. Shrager, at Magellan's invitation for a response, sent a certified letter to Marie Carpenter, Vice President, network Field Management, stating that he assumed that the disclosure of confidential patient information was not required by the contract. Dr. Shrager received no response to his inquiry.
26. Despite Magellan's knowledge of Pennsylvania confidentiality requirements, Magellan, one month later, demanded that Dr. Shrager breach patient confidentiality and allow Magellan to review patient psychiatric records. By letter dated April 24, 2000, Sam Donaldson, Ph.D., Vice President of Clinical Services for Magellan, informed Dr. Shrager that "[a] consultant for Magellan Behavior Health will review 5 treatment records, including three (3) open and two (2) closed cases". A true and correct copy of the letter from Sam Donaldson to Dr. Shrager is attached hereto as Exhibit "A".
27. Magellan did not divulge the consultant's qualifications and did not set forth a procedure to protect the confidentiality of the patient's records or obtain the consent of Dr. Shrager's patients for the release of those records.
28. On May 8, 2000, Dr. Shrager wrote to Magellan voicing his concerns with respect to the confidentiality of patient records and the lack of information provided to him with respect to the Magellan consultants who would be performing the file review. Dr. Shrager also expressed concerns about the exceedingly detrimental effect upon psychotherapy such a record review would cause. A true and correct copy of this letter is attached as Exhibit "B."
29. Dr. Shrager has never refused to cooperate with any quality assurance reviews.
30. Dr. Shrager requested that Magellan reply to this correspondence.
31. On May 15, 2000, seven days after Dr. Shrager's letter of concern was written, a person identifying herself as Diane Birnenberg of Highmark left a phone message for Dr. Shrager stating that Highmark would be placing Dr. Shrager on a list of inactive providers. The message was cryptic and seemed to infer that Dr. Shrager's inquiry regarding confidentiality was the reason for his being "inactivated."
32. Dr. Shrager wrote to Magellan on May 18, 2000 making inquiry with respect to this phone message. A true and correct copy of this letter is attached as Exhibit "C."
33. On May 24, 2000, Magellan delivered a letter to Dr. Shrager stating that Dr. Shrager had to comply with a file review by May 19, 2000, or his status as a psychiatric services provider would be impacted. A true and correct copy of this letter is attached as Exhibit "D."
34. The aforesaid letter was misdelivered by FedEx and was not received by Dr. Shrager in a timely fashion. A copy of the letter from FedEx regarding the delivery is attached as Exhibit "E".
35. Following the delivery of the letter attached as Exhibit "E" on May 24, 2000, counsel for Dr. Shrager wrote to Magellan and inquired as to why no response had been received to Dr. Shrager's prior correspondence. A true and correct copy of this letter is attached as Exhibit "F".
36. In this letter from Dr. Shrager's counsel, Dr. Shrager's concerns regarding patient's confidentiality were again set out and an inquiry was made as to whether Magellan had a legal opinion with respect to the psychiatrist/patient privilege under the circumstances at issue.
37. By letter dated May 31, 2000, Magellan stated that it would be seeking an opinion letter from its legal counsel with respect to the patient records review it wished to conduct. Clearly, Magellan had no idea whether the conduct it was undertaking with respect to patient record reviews was legal or ethical. A true and correct copy of this letter is attached as Exhibit "G".
38. Magellan then sent a letter to Dr. Shrager on June 12, 2000, and advised him that his file had been rendered inactive, and further stated that Magellan would come up with an appropriate transition plan for the Magellan patients being treated by Dr. Shrager. The letter, however, further stated that Dr. Shrager could request reconsideration of this decision Said letter was misdated May 12, 2000. A true and correct copy of this letter is attached as Exhibit "H".
39. Dr. Shrager’s counsel, by extensive letter and exhibits dated July 12, 2000, within the 30 days allotted, wrote to Magellan requesting reconsideration and a hearing. A true and correct copy of this letter is attached as Exhibit "I".
40. At no time has Magellan responded to Plaintiff's counsel's request and no hearing has yet been held.
41. Defendants, via phone and mail, on September 13, 2000, began informing Dr. Shrager's existing and long-standing patients that they, Highmark, would no longer pay for Dr. Shrager's services. In every phone call made, patients were led to believe that Dr. Shrager had left the network of his own free will without any advance notice, in effect abandoning them. Such information and inference is untrue. A true and correct copy of the letter of Highmark is attached hereto as Exhibit "J".
42. Patients who were informed telephonically of Dr. Shrager's termination, in several instances, received the news from a family member with whom the message was left – another example of the Defendants' reckless disregard for patient confidentiality.
43. These phone calls were made and letters sent to Dr. Shrager's patients without his knowledge and without concern by the Defendants as to the current mental status of the patients.
44. Upon information and belief, Defendants have communicated to Highmark and other third parties that Dr. Shrager has lost his credentials and/or is no longer accepted by Magellan as a psychiatric services provider.
45. Upon information and belief, Defendants have not explained to these third parties that Dr. Shrager's loss of credentials resulted from a unilateral, disingenuous and capricious decision by Magellan regarding the demand for Dr. Shrager to turn over confidential patient information.
46. Defendants are and were aware that the third persons informed of Dr. Shrager's loss of credentials are under the impression that this is a result of Dr. Shrager's professional failings as a psychiatrist.
47. Defendants intend and desire that persons learning of Dr. Shrager's loss of credentials believe or fall under the impression that Dr. Shrager has somehow acted improperly or incompetently.
48. Defendants intend and desire that any provider who questions a Magellan directive suffers harm to his practice.
49. Defendants intend and desire that other providers become aware that when a provider questions a Magellan directive, he will lose his credentials.
50. Defendants intend and desire that providers, when dealing with Magellan, shall not advocate what they believe is in the best interests of patients, but instead concur with Magellan's plans for cost savings and control.
51. Defendants have informed certain of Dr. Shrager's patients that Dr. Shrager voluntarily left the Highmark system. This statement is false.
52. Defendants have at no time intended to dialogue or arbitrate the confidentiality dispute with Dr. Shrager. Their response has been to insist that their directives be followed without question, in direct contravention to the parties' contractual agreement.
    

    COUNT I – INTERFERENCE WITH BUSINESS RELATIONS

53. Plaintiff incorporates paragraphs 1 through 52 of the within Complaint as though fully set forth herein.
54. Prior to May, 2000, Dr. Shrager had a successful psychiatric practice that was prospering and continuing to grow.
55. But for Defendants' actions in wrongfully revoking Dr. Shrager's credentials, his practice would have continued to grow.
56. For reasons wholly unrelated to the quality of services provided by Dr. Shrager, Defendants refuse to approve the referral of new patients, and refused to approve care of existing patients by Dr. Shrager, even though the services offered by Dr. Shrager are beneficial to and desired by insured persons in need of psychiatric treatment.
57. At all times relevant hereto, Dr. Shrager has complied with the alleged contractual provisions of his retention as a service provider. Specifically, Dr. Shrager has not acted to violate patient confidentiality, even though Magellan insists that he do so.
58. Defendants have acted to interfere with Dr. Shrager's relationships with his patients by contacting them by phone and in writing and advising them that Dr. Shrager has withdrawn as a provider, an assertion which is untrue.
59. As a direct and proximate result of Defendants' wrongful revocation of Dr. Shrager's credentials, Dr. Shrager's relationship with his patients has been injured and Dr. Shrager's practice will suffer further immediate, irreparable and substantial losses.
         WHEREFORE, Plaintiff demands judgment in his favor and against Defendants in an amount in excess of $25,000, plus interest at the maximum allowable rate, all costs incurred in pursuit of the action and any other further relief that this Court deems just and equitable.
    

    COUNT II – SLANDER/LIBEL

60. The Plaintiff incorporates Paragraphs 1 through 59 of the within Complaint as though fully set forth herein.
61. Defendants have communicated to others via speech, writing or both that Dr. Shrager is no longer an accepted provider of psychiatric services and that he has removed himself from the referred list of providers.
62. Such conversations are false and untrue.
63. Defendants are aware that making that statement without providing any further explanation would cause the recipient of this information to believe that Dr. Shrager had engaged in some professional or ethical wrongdoing.
64. Despite Defendants' awareness that the recipients of the information would misunderstand it, Defendants, with the hope of damaging Dr. Shrager's professional reputation, deliberately did not provide any explanation as to why Dr. Shrager was no longer approved by Magellan.
65. Dr. Shrager has done nothing unethical or unprofessional that would warrant Defendants' refusal to approve him as a provider of psychiatric services. Dr. Shrager has not acted to breach any provision of his contractual relationship with the Defendants.
66. As such, Defendants' representations and failure to explain why Dr. Shrager is no longer an approved provider of psychiatric services are false statements with respect to Dr. Shrager's fitness as a psychiatrist.
67. Defendants have communicated to others via speech, writing or both that Dr. Shrager voluntarily left the Highmark system an assertion which is knowingly untrue.
68. The aforesaid untrue statements led Dr. Shrager's patients to believe that Dr. Shrager had abandoned them.
69. Dr. Shrager has received telephone calls from patients complaining that he has abandoned them.
70. As a result of these false statements, Dr. Shrager has been injured in his reputation and in his psychiatric practice.
         WHEREFORE, Plaintiff demands judgment in his favor and against Defendants in an amount in excess of $25,000, plus interest at the maximum allowable rate, all costs incurred in pursuit of the action and any other further relief that this Court deems just and equitable.
    

    COUNT III – BREACH OF CONTRACT

71. Plaintiff incorporates Paragraphs 1 through 70 of the within Complaint as though fully set forth herein.
72. Pursuant to the contract between Magellan/Greenspring and Dr. Shrager, the parties agreed that "all state and federal confidentiality requirements" with respect to patient records must be followed. A true and correct copy of the amendment to the parties' contract is attached hereto as Exhibit "K" (* not available on the Web version), and an exemplar of the original contract between Greenspring and Dr. Shrager is attached as Exhibit "L" (* not available on the Web version), the original contract being unavailable.
73. Subsequent to Magellan/Greenspring contractually agreeing to comply with all state and federal confidentiality requirements, Magellan requested that Dr. Shrager reveal psychiatric records to Magellan, in contravention of 42 Pa. C.S.A. §5944 and 55 Pa. Code §5100.34.
74. Dr. Shrager raised the issue of confidentiality with Magellan and questioned the propriety of releasing the records in violation of the psychiatrist/patient privilege.
75. Due to Dr. Shrager's questioning of a Magellan/Greenspring directive, Magellan wrongfully revoked Dr. Shrager's credentials, in violation of Section 10.1 of his Greenspring contract.
76. Magellan's action in revoking Dr. Shrager's credentials is in breach of the parties' contract and has caused substantial injury to Dr. Shrager, his psychiatric practice, and his patients.
         WHEREFORE, Plaintiff demands judgment in his favor and against Defendants in an amount in excess of $25,000, plus interest at the maximum allowable rate, all costs incurred in pursuit of the action and any other further relief that this Court deems just and equitable.
    

    COUNT IV – DECLARATORY JUDGMENT

77. Plaintiff incorporates Paragraphs 1 through 76 of the within Complaint as though fully set forth herein.
78. At all times hereto, the parties were bound by the terms of a contract which provided as follows:

    Subject to all applicable statutes and regulations governing
    confidentiality of medical records: (i) Greenspring and payer shall
    have the right at times reasonably acceptable to provider, to review
    member records, to determine compliance with Greenspring
    policies and procedures, with providers obligations under this
    addendum, and with providers other obligations hereunder and, if
    necessary to process claims submitted by provider;
                                   …
    Provider agrees to comply with all state and federal confidentiality
    requirements and the applicable confidentiality provisions in
    Greenspring's policies and procedures.

79. The applicable Pennsylvania confidentiality requirements require Dr. Shrager to keep confidential his patient records except where the patient has provided a written and fully informed authorization, obtained by Magellan, allowing their disclosure.
80. Therefore, pursuant to the terms of the parties contract, Magellan had no right to demand to review patient records and Dr. Shrager had no authority to provide Magellan access to patient records without appropriate patient authorization being obtained by Magellan, the party interested in such a review.
         WHEREFORE, Plaintiff respectfully request that this Honorable Court enter an Order declaring that under the parties' contract, Dr. Shrager has no duty to disclose patient records to Magellan.
    

    COUNT V – CIVIL CONSPIRACY

81. Plaintiff incorporates Paragraphs 1 through 80 of the within Complaint as though fully set forth herein.
82. The Defendants conspired to harm the Plaintiff's psychiatric practice.
83. Defendants knew or should have known that they have no right to access confidential patient records absent written and fully informed authorization from the patient as obtained by Magellan.
84. Defendants knew or should have known that Dr. Shrager was obligated to question the request for production of confidential patient records to Defendants under the circumstances then and there existing.
85. Defendant Highmark agreed with Defendants Magellan and Greenspring that a demand would be made upon Dr. Shrager to turn over confidential patient psychiatric records.
86. Highmark, Magellan and Greenspring agreed that Dr. Shrager's questioning the records request would be used as a reason to deem Dr. Shrager to be an unacceptable psychiatric services provider.
87. Highmark, Magellan and Greenspring agreed that they would inform third parties that Dr. Shrager was not an acceptable provider of psychiatric services.
88. Defendants were obligated to Dr. Shrager and his patients to continue to accept Dr. Shrager as a psychiatric services provider unless there was a legitimate reason to change Dr. Shrager's status.
89. Dr. Shrager's questioning the propriety of the confidential file disclosure is not a legitimate reason for altering Dr. Shrager's status.
90. Defendants have deliberately and intentionally conspired to alter Dr. Shrager's status as an approved provider of insured psychiatric services with the use of illegitimate criteria and with the intention of negatively effecting Dr. Shrager's psychiatric practice.
    COUNT VI – PRELIMINARY INJUNCTION
91. Plaintiff incorporates Paragraphs 1 through 90 of the within Complaint as though fully set forth herein.
92. The Defendants' activities as stated below in terminating Dr. Shrager's status as an approved provider of psychiatric services if allowed to continue will cause Dr. Shrager immediate and irreparable harm that cannot be compensated by damages as Dr. Shrager is threatened with the loss of 40% of his patients.
93. A greater injury will result by refusing to grant the injunction then by granting it in that the injunction request is a request to return the parties to the previous status quota.
94. The activities sought to be restrained are actionable as it represents a tortious interference with Dr. Shrager's business, a breach of contract and libel and/or slander.
95. Plaintiff's right to relief is clear because the Defendants have no legitimate justification for their actions.

          WHEREFORE, the Plaintiff requests that this Court grant the following relief:
          An injunction enjoining Defendants Highmark, Magellan and Greenspring, their agents, servants and employees from:

(a) Requiring the production of patient records without proper authorizations obtained by Defendants and explanations to the patients of their intended use;
(b) Altering/reinstating Dr. Shrager's status as an approved provider of psychiatric services;
(c) Informing any third that Dr. Shrager's status is anything other than an approved provider of psychiatric services;

      And further requiring that the Defendants shall take the following actions:

(d) Determine the identities of any third parties who have been previously informed that Dr. Shrager's status as an approved provider of psychiatric services has changed and provide a list to Plaintiff;
(e) The Defendants shall contact each of these third parties in writing and inform them that any dispute the Defendants have with Dr. Shrager is solely the result of Dr. Shrager's position that patient records are confidential.

Respectfully submitted,
MALONE, LARCHUK & MIDDLEMAN, P.C.


By:____________________________________
     Ray F. Middleman, Esquire
     Attorney for Plaintiff,
     Daniel S. Shrager, M.D.