Indianapolis insurer loses Florida lawsuit

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A federal judge has ordered Medical Savings Insurance Co. to pay $260,000 to a Florida health care system that sued the Indianapolis insurer for allegedly refusing to pay its bills, The News-Press of Fort Myers, Fla., reports.

Medical Savings Insurance was started by Golden Rule Insurance Co. founder J. Patrick Rooney.

Fort Myers-based Lee Memorial Health System filed the suit in 2004, claiming that Medical Savings failed to fulfill its contract that required paying certain amounts of patients’ medical bills. A two-week trial ended Jan. 19.

The hospital system said Medical Savings owed more than $500,000 in unpaid bills and that the insurer cannot arbitrarily set its own rates.

Medical Savings, which pairs tax-free medical savings accounts with high-deductible insurance plans, countered that it paid fair market amount. The company also says hospitals overcharge their patients and that it wasn’t given price breaks granted to larger competitors.

Medical Savings Insurance lost a similar lawsuit —brought by a policyholder—in Oklahoma last year, according to records for U.S. District Court for the Western District of Oklahoma.

In that case, a policyholder sued Medical Savings for not paying bills that ultimately were sent to collection agencies. A jury awarded the individual $550,000 in July 2006.

And in 2004, Medical Savings was ordered by District Court of Tulsa County in Oklahoma to pay a policyholder $44 million. The policyholder claimed Medical Savings refused to pay certain a portion of medical bills for double by-pass surgery, then dropped his coverage after he was diagnosed with pulmonary fibrosis, which involves scarring of the lungs.

Rooney, a conservative millionaire who has said he’s on a mission from God to bring down health care costs, pioneered health savings accounts in the early 1990s. He launched Medical Savings Insurance about 10 years ago.

Earlier this month, his company stopped doing business in West Virginia over a dispute with that state’s insurance commission.

He has not returned several phone calls seeking comment.

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