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August 30, 2014

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Nevada jury orders HMO to pay $500 million in hepatitis case

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Steve Marcus

The office of the Endoscopy Center of Southern Nevada, 700 Shadow Lane, is shown Feb. 27, 2008. Investigators traced hepatitis C infections of nine people to procedures conducted in 2007 at clinics such as this one.

Updated Tuesday, April 9, 2013 | 10 p.m.

Click to enlarge photo

Dr. Dipak Desai appears in court for a competency hearing Friday, Jan. 27, 2012.

A Nevada jury ordered the state's largest health management organization on Tuesday to pay $500 million in punitive damages to three plaintiffs in a civil negligence lawsuit stemming from a Las Vegas hepatitis outbreak.

Two companies — both subsidiaries of publicly traded UnitedHealth Group Inc. — signed a low-bid contract with the physician who ran the clinic where the outbreak started, despite warnings that he sped through procedures and pinched pennies at his clinics so much that patients were at risk of contracting blood-borne diseases, attorneys for those suing the companies argued.

They had sought almost $2.5 billion, telling the jury of five women and three men on Monday that a record amount would show health corporations they couldn't put profits ahead of patient safety. The jury instead assessed a $270 million punishment from Health Plan of Nevada and $230 million from parent company Sierra Health Services.

The smaller award wasn't a disappointment, said Robert Eglet, attorney for plaintiffs Bonnie and Carl Brunson, both in their 70s.

"The jury sent a strong message not only to HPN and Sierra Health, but to every HMO and health insurance company in this country," Eglet said. "You've got to provide a fair and responsible reimbursement rate to medical providers so that they are able to provide quality health care to their insured members."

Plaintiff Helen Meyer, 76, declared herself "very happy." She was represented by attorney Will Kemp.

The companies derided the award, promising to appeal and warning that it could drive up health insurance rates if it stands.

"The number announced today ... represents fantasy damages, not punitive damages," said a statement from company spokesman Tyler Mason. "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."

D. Lee Roberts Jr., lead defense attorney for Health Plan of Nevada and Sierra Health Services, had told the Clark County District Court jury the companies were punished enough by the $24 million awarded to plaintiffs last week in compensatory damages. That award was $9 million for Meyer, $12 million for Bonnie Brunson and $3 million for her husband for loss of consortium.

During six weeks of testimony and arguments, Roberts and other defense attorneys told the jury that Dipak Desai, the physician-owner of the clinics where Meyer and Bonnie Brunson were infected in 2005, was responsible for the hepatitis outbreak, not the companies.

The extent of the hepatitis exposure became apparent in 2008, when the Southern Nevada Health District in Las Vegas notified more than 50,000 people that they were at risk for blood-borne diseases including AIDS and should be tested.

Investigators later traced hepatitis C infections of nine people to procedures conducted in 2007 at Desai endoscopy clinics. Health officials said that although hepatitis C was found in another 105 Desai patients, the cases weren't conclusively linked to procedures at his clinics.

Desai, once a member of the Nevada state Board of Medical Examiners, wasn't named in the civil lawsuit involving Meyer and the Brunsons. He has denied wrongdoing, declared bankruptcy and surrendered his medical license, but faces trial in state court later this month and federal court next month on separate criminal charges stemming from the outbreak.

Desai's lawyers have fought to prove that he is so incapacitated by strokes and other physical ailments that he is unfit for trial. Prosecutors allege that he's faking his ailments to avoid punishment.

The amount awarded Tuesday matched an apparent record set in Nevada in 2010, when Eglet and Kemp won $500 million for other plaintiffs in another civil lawsuit that blamed pharmaceutical companies Teva Parenteral Medicines Inc. and Baxter Healthcare Corp. for the hepatitis outbreak.

That award was appealed, reduced and included in a February 2012 confidential settlement of about $280 million distributed among dozens of plaintiffs in similar cases.

Legal experts on Tuesday pointed to recent U.S. Supreme Court rulings and said any award in the HMO case greater than $240 million — or 10 times the compensatory figure — ran the risk of being slashed.

Darren McKinney, spokesman for the American Tort Reform Association in Washington, D.C., said the trial judge was likely to reduce the award.

"And if the trial judge fails to do that, surely the state Supreme Court, in light of previous U.S. Supreme Court rulings, will reduce it," he said.

John Kircher, a Marquette University law professor and author of the 2012 book, "Punitive Damages, Law and Practice," said a lower figure wasn't a sure thing.

"But the U.S. Supreme Court has said it sees due process problems if the punitive award exceeds compensatory damages by more than a double-digit percentage."

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  1. Guess whose premiums are going up?

    A bunch.