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Psychiatric Hospital Firm Countersues Insurers : Health care: NME says it is a scapegoat. Insurers' attorney calls the lawsuit a standard ploy of fraud defendants.

August 20, 1993|DAVID R. OLMOS | TIMES STAFF WRITER

National Medical Enterprises on Thursday sued 16 major insurance companies, accusing them of conspiring to delay or deny payments for patient care at psychiatric hospitals operated by the Santa Monica-based firm.

The companies named in the civil suit, including Aetna Life Insurance Co., Prudential Insurance Co. and Metropolitan Life Insurance Co., are the same firms that last year sued National Medical in federal court, alleging widespread fraud at the company's psychiatric hospitals.

National Medical's suit, filed in Washington, accuses the insurers of conspiracy, consumer fraud, defamation and restraint of trade. It seeks more than $250 million in damages.

The suit alleges that since January, 1992, the insurers have refused to pay more than $16 million in claims, most of it for pre-approved services, have delayed the processing of claims and have increasingly refused to refer patients to National Medical facilities.

National Medical further claims that the insurers have "engaged in an extensive campaign to blackball" its hospitals from some of the health care networks with which the company has done business in the past.

Robert Burchfield, a Washington attorney representing National Medical, said the insurers are trying to make National Medical a scapegoat in the controversy over escalating insurance rates and to "coerce NME into a quick and unreasonable settlement of their lawsuits."

Howard Veisz, a New York attorney for the group of insurers, called the allegations "a standard ploy of insurance fraud defendants."

The other insurers named in the suit are United of Omaha, Northwestern National Life, Time Insurance, Phoenix Home Life Mutual, Golden Rule, Benefit Trust, Hartford Life & Accident, Great West Life & Annuity, New England Mutual, Connecticut General, Equitable Life Assurance Society, Equicor and First Equicor.

National Medical also filed an amended complaint to a federal civil suit originally filed in July, 1992, against three insurers, Travelers, Massachusetts Mutual Life and Mutual of Omaha. The suit, also filed in Washington, echoes the allegations in the suit against the 16 insurers.

Thomas W. Bruner, a Washington attorney for the three insurers, called the allegations "silly and legally unsupportable." He added, "As the noose gets tighter around NME's neck, we expected such antics."

National Medical operates 61 psychiatric and substance-abuse hospitals, 34 physical rehabilitation hospitals and 34 acute care hospitals.

In addition to the insurer lawsuits, National Medical also faces more than 130 suits alleging physical mistreatment and patient abuse at its hospitals.

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