Laboratory Will Halt Improper Patient Billing

To protect consumers from paying health care bills for which they are not responsible, Attorney General Spitzer today announced an agreement with one of North America’s leading providers of medical laboratory services. The settlement is the latest in the Attorney General’s statewide "Project Clean Bills of Health" initiative.

Under terms of the agreement, MDS Inc., a Canadian-based company, will provide refunds to New York consumers who were improperly billed for services covered or already paid for by their health plans. In addition, the company agreed to reform its billing practices, promising that, when it submits a claim to a health plan, it will not bill consumers until the plan notifies MDS that the consumer may be liable.

It is estimated that as many as two million claims could be subject to the agreement with MDS.

"My office is committed to protecting consumers from unwittingly paying out-of-pocket for services and care that actually is covered by their health plans," Spitzer said.

Specifically, MDS will publish newspaper advertisements informing consumers of their right to submit claims to MDS if they were improperly balance billed or double billed by the company.

The advertisements will run in at least two successive issues of daily newspapers in the Hudson Valley region, where MDS’s New York operations were located. Consumers may submit claims to MDS within 60 days of the second advertisement. MDS also will post information on how to submit claims on its website, www.mdsdx.com.

The Attorney General’s Health Care Bureau investigated complaints from consumers who received bills from MDS even though the company was a "participating provider" with their health plans and the consumers received covered services. Spitzer's office determined that MDS improperly "balance billed" some consumers by charging them for the entire balance of the bill when MDS had submitted a claim to the consumer's health plan but received no response from the health plan. In certain instances, both the health plan and the consumer paid the billed amount in full, resulting in MDS improperly receiving double payment on a single bill.

Under New York law and contracts that health plans have with most health care providers, a provider cannot bill a consumer who is properly enrolled in a health plan if the provider is a "participating provider" and the services received from the provider are covered under the plan. Exceptions to this prohibition are bills for deductibles, coinsurance and amounts designated by the health plan as the consumer's responsibility.

The Attorney General also found that certain bills to consumers contained potentially misleading language which suggested that the consumer was liable for amounts which, by law or by contract, actually were not the consumer’s responsibility.

MDS also has agreed that it will not engage in such practices in the future if it re-enters the market in New York. During the course of the Attorney General’s investigation, MDS sold its New York State business to Laboratory Corporation of America Holdings ("Labcorp"), a Delaware corporation.

Richard Kirsch, executive director of Citizen Action: "Consumers should not have to worry that their health care providers are charging them for services that are covered by their health plans. I commend Attorney General Spitzer for his efforts to clean up these improper billing practices that add to families' health care cost burdens."

In the past two years, "Project Clean Bills of Health" has obtained restitution for consumers who were balance-billed or double-billed by Quest Diagnostics, Inc., Vineall Ambulance Co. of Oneida County and WellCare of New York.

Consumers and providers with questions or concerns about health care matters can call the Attorney General's Health Care Bureau Hotline at 1-800-771-7755 (option 3).

The investigation was handled by Assistant Attorney General Heather Hussar under the direction of Health Care Bureau Chief Joe Baker and Deputy Bureau Chief Troy Oechsner.