Health Insurers Ordered To Pay $500 Million Punitive Damages In Nevada Hepatitis C Outbreak

LAS VEGAS - (Mealey's) A Nevada state court jury on April 9 ordered two health insurers to pay $500 million in punitive damages to three plaintiffs who claim that the defendants' actions contributed to them or a spouse becoming infected with hepatitis C during colonoscopies, a source told Mealey Publications (Helen Meyer v. Health Plan of Nevada, et al., No. A583799, Bonnie Brunson, et al. v. Health Care Plan of Nevada, No. A608344, Nev. Dist., Clark Co.).

The jury in the Clark County District Court found that Health Plan of Nevada Inc. (HPN) should pay $270 million in punitive damages and that Sierra Health Services Inc. should pay $230 million to plaintiffs Bonnie and Carl Brunson and Helen Meyer.

Both companies are owned by UnitedHealthcare Services Inc.

In the compensatory damage phase, the jury on April 4 found that HPN and Sierra Health Services were negligent toward Bonnie Brunson and Helen Meyer and were responsible to Carl Brunson for loss of consortium. The jury awarded $12 million in compensatory damages to Bonnie Brunson, $3 million to Carl Brunson and $9 million to Meyer.

Defendant: Punitive Verdict 'Fantasy'

The jury also found that the defendants were liable for punitive damages. The punitive phase took place April 8, and after six hours of deliberations, the panel returned its verdict the following day, according to the source.

In a press release yesterday, HPN said the punitive damage verdict "has no grounding whatsoever in reality - it represents fantasy damages, not punitive damages."

The insurer said it will appeal what it said was exclusion of evidence that the plaintiffs' infections were due to the actions of Dr. Dipak Desai, a gastroenterologist who operated several endoscopy clinics in the Las Vegas area that health authorities said were the origin of the infections.

"We have a compelling case for appeal since the jurors were barred from hearing extensive evidence and testimony about how Dr. Desai's covert, criminal practices were hidden from the entire community, including Health Plan of Nevada," the insurer said. "For example, the jury did not hear that Dr. Desai has been criminally charged for the outbreak, that the same plaintiffs already sued and collected millions from a pharmaceutical company, that we used extensive provider credentialing and contracting policies and procedures, that Dr. Desai and others were credentialed or accredited by other HMOs [health maintenance organizations], hospitals and the Accreditation Association for Ambulatory Health Care, and that during the relevant time period a number of government agencies had inspected the clinic where these providers practiced and found no issues."

Doctor At Fault

"Even more troubling, the court held that placing Dr. Desai in HPN's network caused the plaintiffs to contract Hepatitis C because: (1) plaintiffs' Hepatitis C was the result of Desai's medical malpractice; and (2) a doctor's medical malpractice is always a foreseeable consequence of placing a doctor in a health plan's network," the insurer continued. "If allowed to stand, this would have a devastating impact on the availability and affordability of health insurance in Nevada."

"The only numbers that matter here are the higher insurance premiums that Nevadans may pay if health plans are held liable for the criminal conduct of independent doctors," it added.

The plaintiffs claim that they were infected with hepatitis C due to the colonoscopy practices of Desai that were paid for by HPN. They sued the defendants for breach of contract and cited state law that requires insurers to annually review the quality of health care by providers they reimburse.

Supplies Reused

A 2008 hepatitis C outbreak was traced by state health authorities to Desai's colonoscopy clinics. Patients who eventually filed personal injury lawsuits alleged that Desai instructed his staff to reuse vials of the general anesthetic propofol (Diprivan) on multiple patients and to reuse syringes used to inject propofol into intravenous lines of multiple patients.

Last year, propofol manufacturer TEVA Pharmaceutical Ltd. took a $270 million charge and said it agreed to settle the injury claims. The settlement came after the company lost three state court trials.

Desai and two nurse anesthetists have been charged with second-degree murder in the death of a patient. Desai and his chief operating officer are also facing a March 7 trial on federal charges of conspiracy and health care fraud for overbilling Medicare and six health insurers - including UnitedHealthcare - for anesthesia services.

The plaintiffs are represented by Robert Eglet of Eglet Walls and Will Kemp of Kemp, Jones & Coulthard, both in Las Vegas. The defendants are represented by Lawrence Scarborough and J. Alex Grimsley of Bryan Cave in Phoenix and D. Lee Roberts and Carol Michel of Weinberg, Wheeler, Hudgins, Gunn & Dial in Las Vegas.

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