Medical Financers Take Fraud Case to Arbiter

     CHICAGO (CN) – A class of medical patients allegedly victimized by a health care financing scheme must arbitrate their case because the doctor-patient relationship does cover not such claims, a federal judge ruled.



     CareCredit is a health care financing program, focused on elective and nonemergency care, operated by GE Money Bank.
     The 2010 federal class action accused the CareCredit and GE Money Bank of offering kickbacks to medical providers that steered patients their way for treatment financing. The companies also allegedly debited patients’ accounts before the procedures ever occurred and advanced payment to providers.
     Diana Jezek and Laura Moritz claimed they could not get out of a 10-year contract with CareCredit participant Heart Check America because the financing agency already paid the bill in full. The women had signed up for the $4,694 service after receiving free heart scans last year, but their doctors told them such tests were “not beneficial” when subsequent scans showed “abnormal results.”
     A third named plaintiff, George Gillispie, filed suit over his CareCredit account for dental treatment in Indiana.
     CareCredit’s agreements contain an arbitration clause designed to prevent a suit like this one, but the plaintiffs said the provision is invalid because it functions as a breach of the fiduciary duties that their doctors owed them.
     U.S. District Judge James Zagel ruled last week, however, that this attack constituted an attack on both the arbitration clause and the financing contract, meaning that he would have to grant CareCredit and GE’s motion to compel arbitration.
     “It is for the arbitrator to determine the validity of a contract as a whole, whereas challenges to an arbitration clause remain with the province of the court,” Zagel wrote.
     The nine-page decision goes on to parse the nature of physician-patient fiduciary relationships.
     “Plaintiffs cite no authority to show that in the context of the physician-patient relationship, transactions outside of medical treatment, such as financing through CareCredit, are subject to the fiduciary relationship,” Zagel wrote.
     In other words, insofar as it acts as financier, a medical provider may have no fiduciary duty to its patients. The “transactions” covered by the relationship are only medical, not commercial.
     “Though plaintiffs assert that ‘the financing and payment for plaintiffs’ medical treatment is undoubtedly within the scope of the fiduciary relationship,’ this statement is unsupported by any citation to law,” Zagel wrote.

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