Beaufort News

Bluffton-based CareCore to change how it operates in wake of agreement with N.Y. officials

A major Bluffton employer will change how it operates and is structured after New York's attorney general investigated complaints and determined the company's practices violated state law.

The agreement calls for CareCore National -- which manages the cost, quality and safety of health insurance plans for companies such as Aetna Health Inc. -- to restructure and change how it forms networks of approved medical providers.

The agreement indicates the steps are designed to diminish the influence of radiologists who own stakes in the company and also do business with it.

CareCore did not admit any wrongdoing in the agreement, which was signed Dec. 20 by CareCore chairman and CEO Donald Ryan and New York's Executive Deputy Attorney General for Economic Justice Maria Vullo.

Company officials described the agreement as the final step in "an evolutionary process" the company began in late 2005.

"The agreement with the Attorney General will complete CareCore's transition to a business model that reduces the role of practicing radiologists who founded the company solely to clinical issues, while eliminating any role they may have had in governance," the company said in a statement. "The agreement reflects the greater size, growth and complexity of CareCore's business and its confidence that its operations may be overseen entirely by professional management."

The agreement came after the attorney general's office investigated complaints asserting CareCore refused to contract with qualified physicians. The attorney general also fielded complaints "about CareCore's preference for its owners in network decisions," according to the agreement.

A jury recently ruled against CareCore in a federal antitrust case dealing with similar issues, a verdict that could cost the company more than $30 million. CareCore officials said the company acted lawfully and "in the interest of quality, cost-effective health care." They vowed to appeal the verdict.

In that case, CareCore was sued by several New York radiology practices that offer the "Upright MRI," which their lawyers say is the only MRI that can scan patients in weight-bearing positions, so patients can feel pain and health care providers can better diagnose ailments such as spine injuries.

The plaintiffs alleged CareCore and radiologists who own it acted as a gatekeeper to some of the largest insurance-company radiologist networks in New York.

That protected the radiology practices of CareCore's owners from competitive threats that would have hurt their individual medical practices, according to a Dec. 1 announcement of the verdict by the plaintiffs' attorney.

CareCore also harmed thousands of patients who were effectively prevented from receiving Upright MRI scans, the plaintiffs asserted.

Matthew Cantor, lead attorney for the New York law firm Constantine Cannon, which represented the plaintiffs, said the attorney general's agreement strengthens his clients' position.

"Clearly, the New York attorney general was convinced of the propriety of the jury verdict in our case," Cantor said.

He doesn't buy CareCore's denial of wrongdoing.

"Obviously, they think they did something wrong or they wouldn't have entered into this agreement," he said.

Cantor said his clients have asked a judge to require CareCore to do several things, some but not all of which are included in the company's agreement with the attorney general.

The agreement calls for CareCore to establish an appeals process for providers that have been denied membership in a CareCore network, for example, but Cantor said the court should specifically mandate his clients are included.

"There are still other things that need to be done to rectify the harm the jury found," Cantor said.

CareCore was founded in 1994 and moved its headquarters from Wappingers Falls, N.Y., to Bluffton in 2007.

The company employed about 400 in the area and about 1,000 nationwide as of March, when it began construction of a new corporate headquarters expected to house another 150 employees at Buckwalter Place.