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HMO held responsible for doctor's malpractice to tune of $500M

Two subsidiaries of UnitedHealth Group that conduct business in Nevada have been hit with a total of $500 million in punitive damages in a case related to the medical malpractice of a doctor in their network. The verdict could indicate that health insurance companies in Nevada could be required to closely monitor the practices of their doctors and hospitals if they do not want to be exposed to civil liability.

The doctor in the underlying case was a gastroenterologist who regularly performed endoscopies on his patients. He was later discovered to have infected several of his patients with hepatitis C due to his unsafe and cost-cutting practices. Two of the patients who had contracted the illness sued Health Plan of Nevada and Sierra Health Services, claiming that they were responsible for the negligent malpractice.

The trial concluded in early April with a $24 million verdict in favor of the plaintiffs. The next week, the jury convened to determine whether to award the plaintiffs punitive damages. They decided to order Health Plan of Nevada to pay $270 million and Sierra Health Services to pay $230 million for a total of $500 million, a huge sum but half of the $1 billion the plaintiffs had sought.

It appears that the defendants will appeal. Health Plan of Nevada says that the punitive damages were unreasonable.

Unless the verdict itself is overturned on appeal, the ruling seems to imply that health insurance companies could be financially liable when a doctor in their network commits medical malpractice. That in turn could mean that the companies would have to invest in monitoring of their doctors and hospitals.

Source: Reuters, "UnitedHealth units hit with $500 million verdict in hepatitis case," April 9, 2013

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