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Aultman files allegations in response to Mercy's
By Cheryl Powell
Beacon Journal medical writer
Published on Tuesday, Jun 17, 2008
The bad blood between Canton's rival cross-town hospitals is getting even thicker.
Aultman Health Foundation filed its own set of allegations last week in Stark County Common Pleas Court against Mercy Medical Center in response to Mercy's lawsuit last year accusing Aultman of unfair business practices.
Mercy is accusing Aultman of misusing charity money to underwrite insurance losses and fund secret payments to insurance agents to steal away patients and monopolize the Stark County market.
But in its 77-page response and counterclaim, Aultman — the parent of Aultman Hospital — denies those claims and accuses Mercy of spreading ''libelous falsehoods'' and running its own ''false and misleading advertising scheme.''
In the court filing, Aultman maintains that Mercy ''maliciously filed this baseless lawsuit and has published false statements about Aultman, in an attempt to extort money from Aultman, injure Aultman's reputation in the community and gain competitive advantage over Aultman.''
Aultman is seeking actual and punitive damages, along with court orders dismissing Mercy's lawsuit and barring Mercy from making similar claims in the future.
''For these two hospitals to now be battling in a legal case is very, very sad and unfortunate and unnecessary,'' Aultman attorney Allen Schulman said on Monday. '' . . . This is a very unfortunate lawsuit with regard to our community. It's going to necessitate the spending of enormous resources that would be better spent in this community, as opposed to prosecuting or defending a lawsuit.''
But Mercy attorney Lee E. Plakas said on Monday that his client has ''shown courage in taking a stand against secret, anti-competitive business practices which unfairly restrict consumers' health-care choices.''
Payment allegations
In its suit, Mercy alleges that Aultman tried to destroy local competition by giving secret payments from its nonprofit foundation to nine health-care insurance brokerage firms that switch clients to AultCare, the health system's insurance arm.
Mercy accuses Aultman Health Foundation of using millions of dollars of its tax-exempt money to fund the broker payments, as well as to provide stipends to medical providers who contract exclusively with AultCare.
Participating brokers signed confidentiality agreements that forbid them from telling anyone — including the companies they represented — about the extra payments, according to the complaint.
Brokers negotiate with insurers on behalf of employers that offer health coverage to their workers and help the companies select the best plans.
''The Mercy lawsuit stands for the proposition that tax-paying citizens have the right to know that their charitable contributions are being distributed to for-profit insurance companies, insurance brokers and individual doctors rather than for charitable purposes,'' Plakas said.
Aultman officials, however, maintain these ''conversion support payments'' are legitimate compensation to help brokers with extra work that comes with switching a client to a new insurance plan.
AultCare started the conversion support payment initiative in 1997, when for-profit competitors increasingly were moving into Northeast Ohio.
All along, Schulman said, AultCare's goal has been to break even while providing access to affordable health care for the region.
Mercy Medical Center was partially owned by a for-profit hospital chain in the 1990s. The hospital now is a nonprofit hospital owned by CSAHS/UHHS-Canton Inc., a partnership between University Hospitals in Cleveland and the Sisters of Charity Health System.
State reviews program
In its response and counterclaim, Aultman said the Ohio Department of Insurance reviewed the extra payments to agents and determined the program didn't violate state law.
Since the program started, Aultman has paid about $8.9 million in extra payments to insurance agents who collectively switched a total of 69,000 people to AultCare, spokeswoman Robin Clark said.
In late 2006, AultCare started disclosing the payments to the clients of brokers who received them, she said.
Along with defending its own business practices, Aultman also used the court filing to level allegations against Mercy.
The counterclaim alleges that Mercy has been using misleading advertisements, including one that touts ''37 out of 38 insurance plans pick Mercy as their hospital of choice in Stark County.''
Aultman Hospital only contracts with AultCare by choice, Aultman stated in the court filing.
In a prepared statement, Mercy said it ''is proud of the way it conducts its business, is willing to make full disclosure of its practices in this litigation, and challenges Aultman to do the same rather than concealing its business practices.''
Mercy isn't the first competitor to accuse Aultman of using questionable business strategies.
The former HomeTown Health Plan (now owned by The Health Plan of the Upper Ohio Valley) also is accusing Aultman of stealing customers by giving secret payments to insurance agents who persuade clients to switch health insurers. The case is pending in Tuscarawas County Common Pleas Court.
In 2005, Aultman purchased another competitor, Professional Claims Management of Canton, that filed a lawsuit with similar claims.
Cheryl Powell can be reached at 330-996-3902 or chpowell@thebeaconjournal.com.
The bad blood between Canton's rival cross-town hospitals is getting even thicker.
Get the full article here.
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