Feb. 21 (Bloomberg) -- A unit of UnitedHealth Group Inc., the biggest U.S. medical insurer, was accused of failing to properly oversee a Las Vegas doctor who gave colonoscopy patients hepatitis C by mishandling the anesthetic Propofol.
UnitedHealth’s Health Plan of Nevada Inc. unit renewed contracts with Dipak Desai, a former gastroenterologist, even though it knew of his “substandard” medical practices, Robert Eglet, an attorney for two women who contracted the disease, told jurors in state court in Las Vegas yesterday.
UnitedHealth denies the allegations. One of its lawyers, Lawrence Scarborough, said in court that he planned an extensive defense presentation today.
Eglet presented the plaintiffs’ opening statement in the first trial against the unit of Minnetonka, Minnesota-based UnitedHealth over a hepatitis C outbreak linked to Desai’s clinic. The outbreak forced Nevada officials to notify 50,000 patients of potential risks, Eglet said. UnitedHealth has said it shouldn’t be blamed for the doctor’s actions.
“This turned out to be the largest hepatitis C outbreak in United States history,” Eglet told jurors at the trial followed
remotely over the Courtroom View Network. “We are suing the HMO companies for violating the public safety rule requiring an HMO to make the health and safety of its insured members its primary concern.”
Officials with Health Plan of Nevada knew in the late 1990s about Desai’s poor reputation after a doctor who was employed at one facility informed the company that Desai was cutting corners and compromising patient safety, Eglet said.
Desai performed colonoscopies in as little as three minutes, much shorter than the standard time of more than 20 minutes, Eglet told jurors.
The Nevada unit’s officials didn’t adequately review Desai’s medical practices before hiring him or properly oversee his operations, Eglet said. He said his clients Helen Meyer and Bonnie Brunson both contracted hepatitis C at Desai’s facility.
“A reasonable and responsible HMO should not place or keep a health-care provider on its provider network that it knows or should know is unsafely treating patients,” Eglet told jurors.
The UnitedHealth unit never followed up on allegations against Desai and renewed contracts with the doctor’s group amid complaints of his failure to diagnose cancer and Crohn’s disease in several patients, and of lapses in hygiene at the facility. The contract renewals came as Health Plan of Nevada’s membership grew to more than 300,000 in 2004 from 100,000 in 1993.
By March 2004, Desai’s group was performing as many as 100 procedures a day at its facility. By January 2005, the staff was unable to keep up with the volume of HMO patients requiring procedures, Eglet said. The following month the group was recognized as having the shortest colonoscopy procedure time in the U.S. in 2004, Eglet said.
The first case of acute hepatitis C infection was reported in December 2007. The state announced the outbreak linked to Desai’s clinic in February 2008, Eglet said.
In addition to reusing Propofol vials, Desai’s center failed to change fluid used to disinfect medical devices, reused biting blocks and even cut corners on disposable medical napkins used to treat incontinence in patients, Eglet said.
The trial comes a month after UnitedHealth officials said fourth-quarter earnings of $1.20 a share met analysts’ expectations and the insurer added 6.4 million members after acquiring Amil Participacoes SA, Brazil’s largest managed-health provider. The company had a market value of $58 billion as of Feb. 19, according to data compiled by Bloomberg.
Nevada colonoscopy patients shouldn’t seek to hold UnitedHealth liable for Desai’s mishandling of their procedures, according to the insurer.
“Making insurers liable for the deliberate malpractice of independent doctors will force those insurers to seek intrusive, burdensome and expensive oversight of how care is delivered,” Tyler Mason, a UnitedHealth spokesman, said Feb. 19 in an e- mailed statement.
Lawyers for Meyer and Brunson said during jury selection that they may ask the panel to award $1 billion in punitive damages for the insurer’s alleged failure to properly vet the doctor and monitor his operations, according to court transcripts.
Nevada juries already have handed down multimillion-dollar punitive awards against Teva Pharmaceutical Industries Ltd., which made the Propofol used by Desai. Three juries awarded colonoscopy patients more than $750 million in punitive damages over the drugmaker’s decision to sell the anesthetic in oversized vials that could be reused.
Teva, based in Petach Tikva, Israel, agreed last year to pay $250 million to settle more than 80 lawsuits over Propofol sales.
Desai, 62, and two nurse anesthetists are facing second- degree murder charges over the death of a colonoscopy patient. A trial on the state charges is set for April. Desai also faces federal fraud charges.
Meyer and Brunson are suing the UnitedHealth unit under a Nevada law that requires HMO officials to file annual reports showing they have reviewed the quality of health services provided to consumers covered by their plans.
The insurers should have known as early as 2004 that Desai was using unsafe medical practices, Eglet, the plaintiffs’ lawyer, said.
UnitedHealth officials contend that Desai hid his practices from the company, state agencies and accreditation boards and he was admitted to practice in more than a dozen hospitals in the Las Vegas area.
“Our deepest sympathies go to the victims and their families in this terrible situation that we wish had been caught sooner,” Mason said in the statement.
The case is Meyer v. Health Plan of Nevada Inc., A5837999 (Consolidated), Clark County District Court (Las Vegas).
--With assistance from Phil Milford in Wilmington, Delaware, Dawn McCarty in Wilmington, Alex Nussbaum in New York and Edvard Pettersson in Los Angeles. Editors: Andrew Dunn, Glenn Holdcraft