Nov. 10 (Bloomberg) -- After a Jeep crashed into her Geo Metro in Clearwater, Florida, in 2009, Kathleen Weston’s back and neck hurt. So she called 1-800-ASK-GARY, a medical-referral service advertised on local television.
Weston was directed to Physician’s Group, a chain of clinics founded by Gary Kompothecras, a chiropractor who has grown wealthy and gained prominence in Florida catering to car-accident victims. Earlier this month, capping years of political activity, Kompothecras was named a co-chair of presidential contender Mitt Romney’s Florida finance team.
Weston was billed an average of $385 for each of 41 visits to a Kompothecras clinic -- usually including a chiropractic adjustment, electrical stimulation and ultrasound treatment. The total tab after four months: $23,081.74. That included $4,109 for three MRI scans and $120 for a take-home stimulator, known as a TENS device, that retails at Sears for $37.99.
“I said you have to be kidding me,” said Weston, who hired a lawyer and recently had the charges reduced by about half. “My neck was hurting. I was still having spasms.”
The cost of treating pain in the U.S. has tripled in the last decade to as much as $300 billion, or one in every nine health care dollars. The growth has been stoked by medical entrepreneurs across the country, who have started for-profit clinics providing back surgery, steroid injections, prescription narcotics, massage, electrical implants and more.
The pain field has “degenerated into turmoil” as competition has increased, with provider quality varying widely and many patients not getting effective care, according to John LaRosa, president of Tampa-based health-care researcher Marketdata Enterprises Inc. “Profits, not patient care and effective outcomes, are the focus.”
Physician’s Group’s website lists more than 50 clinics, part of a thriving pain-treatment specialty in car-crash medicine. His ask-Gary service is just one of the state’s 72 registered referral networks, up from 10 five years ago. Their hot lines are their calling cards: 1-800-411-PAIN, 1-800-NeedHelp and 1-305-NO-FAULT among them.
Florida-based networks also operate in Georgia, Kentucky, Massachusetts, Minnesota and Tennessee. In Texas, former Dallas Cowboys safety Darren Woodson holds forth on TV ads for 1-877-380-PAIN, also known as Accident & Injury Chiropractic. In greater New York City, 44 percent of auto-accident claimants went to a pain clinic in 2010, up from 32 percent in 2007, according to the industry-sponsored Insurance Research Council.
Florida’s Division of Insurance Fraud is conducting a criminal probe of accident-referral services, according to Captain Steven Smith, one of the department’s investigators. The ask-Gary network is under scrutiny as part of the state inquiry, according to two people with direct knowledge of the investigation. The FBI has also been making inquiries about ask-Gary, said four people familiar with the matter.
State investigators are trying to determine whether clinics or lawyers in the networks make unlawful payments for referrals and whether patients are being treated for non-existent injuries, Smith recently told the Florida bar association.
The FBI wants to know whether lawyers are directing treatment based on how much insurance coverage patients have, according to people familiar with the matter. Only licensed medical practitioners are permitted to decide treatment.
Physician’s Group complies with all ”laws, regulations and rules of ethics,” said Steven Burton, an attorney for the clinics. Gregory Zitani, Physician’s Group’s general counsel, said the group was “unaware of any pending investigation.” He told the bar association in June that lawyers in the ask-Gary network have “absolutely no requirement” to send patients to Physician’s Group.
“We have always held strict adherence to the highest quality of care,” Kompothecras said in a statement. “We have served thousands of patients with no malpractice claims to date.” He noted that the clinics are accredited by the Joint Commission, a nonprofit standards-setter in health care. Physician’s Group presented statements from nine employees, including doctors, saying they didn’t consult with lawyers in making care decisions.
Ask-Gary and Physician’s Group boost medical costs by adding to demand for services, charging premium prices, and working closely with lawyers that pursue maximum payouts for injury claims, according to patients, medical bills, internal e-mails, and former employees of the group.
Bust to Boom
Patients who wind up at Physician’s Group after calling the hotline get a treatment routine that shows up repeatedly on bills provided by patients to Bloomberg News. The regime includes electrical stimulation, chiropractic manipulation, ultrasound, massage, heat packs and “intersegmental traction,” or putting patients on a back-undulating bed.
Research-based treatment guidelines from the American Pain Society and others take a dim view of the efficacy of electrical stimulation, ultrasound and lower-back massage when it immediately follows an injury. Physician’s Group didn’t respond to a request for research supporting its treatment choices.
Early in his career, Kompothecras went bust as a stockbroker and shipping entrepreneur. With his personal bankruptcy behind him, he opened his first clinic shortly after obtaining his chiropractor’s license in 1996.
Today his clinics have $70 million to $80 million in annual revenues, according to industry estimates. Kompothecras recently built a 29,948-square-foot, oceanfront mansion on Siesta Key in Sarasota assessed at $7.4 million. He owns an 11-seat private jet and earlier this year purchased Sarasota’s Captiva Beach Resort for $1.83 million.
Ask-Gary spends at the rate of $12.6 million a year advertising its toll-free number, according to media researcher Nielsen Holdings N.V. That’s about triple the 2006 spending disclosed by the network.
Television ads in cities like Tampa, Jacksonville and Orlando have urged accident passengers to ask Gary “for a doctor right now -- don’t wait,” saying they may be entitled to $10,000. Callers are referred to lawyers that pay to join the network, who often send them to Kompothecras clinics.
Last year, the network agreed to pay $1.2 million to replace Ford Motor Co. for the naming rights of the 20,000-seat showcase at the Florida State Fairgrounds in Tampa, now called the “1-800-ASK-GARY Amphitheatre.”
Kompothecras has made political donations of $312,000 over the last 12 years, mostly to Republican candidates and their causes. His money has backed former Florida governor Charlie Crist, who works at Morgan & Morgan, a firm with lawyers in the ask-Gary network.
After current Gov. Rick Scott was elected, Kompothecras kicked in $25,000 for his inaugural. He and his wife gave a total of $5,000 -- the legal maximum -- to Romney in June, according to federal election records. Democrats have also received his donations on a smaller scale.
Physician’s Group and Kompothecras wouldn’t discuss the finances of the clinics or referral network. Ryan Williams, a spokesman for the Romney campaign, and Amy Graham, speaking for Gov. Scott, declined to comment.
Crist said in an interview that Kompothecras was a “very generous” supporter. Later calls to him for comment on the investigations weren’t returned.
Car-accident treatment is growing despite fewer road injuries and crashes. Insurers’ losses -- payments made or expected on personal-injury protection claims -- rose to $13.4 billion in the U.S. last year, up 66 percent from 2006, the National Association of Insurance Commissioners estimates. People injured in auto accidents declined by 14 percent to 2.2 million between 2006 and 2009, the last year of available data. Florida’s payouts for personal-injury protection, or PIP, were $2.4 billion, over a sixth of the U.S. total.
“With fewer car accidents, you are now seeing that people have learned how to exploit this system for their own financial benefit,” said Jeff Atwater, the state of Florida’s chief financial officer, who oversees insurance investigations.
Chiropractors had “no control over the patients” at Physician’s Group because treatment was directed by lawyers, according to a deposition by Jeffrey Lauffer, a former supervisor for the Kompothecras chain. Attorneys directed the clinic to cancel or order procedures depending on how much insurance a patient had, Lauffer said in the sworn statement, which he gave on behalf of an insurer contesting Physician’s Group bills.
Internal Case Notes
A computerized notes system called MedPlus was used at Physician’s Group to relay the lawyers’ instructions to medical staff, according to Lauffer. In the treatment of one 2009 patient, an employee of Tampa-based Morgan & Morgan was the “case manager,” MedPlus notes reviewed by Bloomberg News say.
When a doctor at the clinic recommended five MRI scans, Physician’s Group requested “approval on MRI’s” from Morgan & Morgan, the notes state. The case manager “called and said patient only has 10K only, very minimal. We could schedule one MRI and just do light treatment.” Notes on a second patient indicate the “attorney approved two MRI’s.” Three calls to Morgan & Morgan seeking comment weren’t returned.
Lauffer said he believed the intervention of non-clinical staff in the treatment of patients was illegal. He left the company in 2009 because he feared he might lose his chiropractic license if he stayed, according to his sworn statement.
Physician’s Group said Lauffer’s allegations are false. In a lawsuit brought after inquiries for this story began, the operator of the ask-Gary network said Lauffer sought cash from Physician’s Group in exchange for the return of documents Lauffer took when he left.
Similar allegations led to an investigation last year by the Hillsborough County Sheriff’s office that was closed in July with no action taken, according to sheriff’s spokeswoman Debbie Carter. Lauffer declined comment on the lawsuit.
Florida, one of a dozen states with no-fault insurance laws, mandates that drivers carry at least $10,000 in PIP coverage. Insurers that fail to pay a legitimate PIP claim in full within 30 days face penalties including 2.5 times the claimant’s attorney’s fees, even when the claimant caused the accident. New Jersey, Pennsylvania, and North Carolina have similar rules, according to a Florida Senate report.
The Florida insurance department says 10,000 lawsuits are pending in state courts over claims denials and blames higher premiums on rising PIP costs. For the minimum $10,000 in PIP, a typical 40-year old woman with a clean driving record in Tampa paid $870 last year, up 82 percent since 2008.
Bills paid with PIP coverage can be high. Medical facilities were paid an average of $146 an hour for massage, the most-prescribed therapy for accident victims in Florida last year, according to Mitchell International Inc., a San Diego insurance-software firm that has data on 65% of claims in the state. Licensed Florida massage therapists receive about $12 to $41 an hour, according to compensation researchers PayScale Inc.
Florida clinics were also paid $50.5 million under PIP for 2.4 million ultrasound pain treatments last year, according to Mitchell. An American Pain Society review of low back pain studies “found very little evidence showing that what we call ’physical modalities’ -- things like traction, ultrasound, TENS etc. -- are effective,” said Roger Chou, an internist at Oregon Health & Science University, who leads the clinical guidelines program at the society.
European Commission guidelines formulated by 48 experts concluded that massage, ultrasound, and traction should not be “routinely used” and couldn’t be recommended for back pain.
Physician’s Group patients were treated until their insurance benefits were gone even when they felt no pain, according to Ernestine Brantley, a former office manager for the company in Lake City, Florida. In an interview, Brantley said that using up all the benefits was referred to internally as “milking the system.”
Brantley said she was fired in August 2010 after complaining of fumes in the office, and of an inappropriate relationship between a therapist and a patient. Physician’s Group’s Zitani said Brantley’s assertions about the firm and the reasons she left were false, and didn’t elaborate.
Everyone was initially given the same treatments regardless of injury type or whether they were hurt at all, according to Brantley. “We would tell them even if you don’t think you are hurt, three days from now will feel it,” she said. Chiropractors were ordered to apply ultrasound to parts of the body that felt fine to patients, she said.
Physician’s Group also sold patients take-home TENS units. (The acronym stands for transcutaneous electrical nerve stimulation). Brantley said chiropractors were reprimanded if they didn’t order enough of the devices, which send electrical impulses through electrodes attached to the skin.
Evidence that they lessen pain is scarce. “Treatment with TENS is no more effective than treatment with a placebo,” concluded a 1990 study by academic and Veterans Administration researchers in the New England Journal of Medicine. The American Academy of Neurology and the Cochrane Collaboration, a non-profit that studies the effectiveness of treatments, recommend against TENS therapy for back problems.
Asked for research backing TENS use, Physician’s Group didn’t respond. A 2008 study review in the journal Current Rheumatology Reports found that “evidence continues to emerge” in clinical trials “supporting the use of TENS for the treatment of a variety of painful conditions.” Two of the five study authors received grants from a TENS manufacturer.
Last year, Florida auto insurers spent at least $3.8 million for 9,526 TENS units, according to Mitchell. The average insurance reimbursement per unit of $398 indicate a hefty markup from prices ranging from $59 to $139 on the Web sites of three medical device sellers.
Jenniffer Molina, a 32-year-old mother of three in Tampa, was on her way to buy diapers when her car was hit by a drunk driver in June 2007. One of her passengers called ask-Gary, which resulted in a visit to Molina’s hospital bed from Winters & Yonker, a firm with lawyers in the ask-Gary network that signed her as a client, Molina said.
Her leg, broken in the accident, was repaired with a metal rod and three screws at the hospital. After her release, Molina said a Winters & Yonker legal assistant told her the firm had arranged for her treatment at Physician’s Group. She said she assumed the visit was a routine follow-up.
During an examination, a Physician’s Group staffer told her she had tension in her neck and shoulders, although she said she didn’t complain of pain anywhere but her leg. Over the next three months, the clinic treated her neck and back with TENS, massages, electrical stimulation and heat packs. She said she liked the massages and thought it was important to go to the clinics because the law firm told her to.
Molina has filed a confidential complaint against Winters & Yonker with the Florida bar association, which said the “matter is under investigation.” The law firm and Peter Brudny, Molina’s attorney, declined to comment on the complaint.
Chiropractors’ bonuses at Physician’s Group were based on how many services they ordered, according to Lauffer. In one case, he says a supervisor told him to “give a TENS unit out of every visit.”
The chain had “no regard for the patient,” said Lauffer, who oversaw clinics in Kentucky and worked at others in Florida. David Balot, the head of Physician’s Group’s day-to-day operations, began one meeting by saying, “All these patients are not really hurt, and they’re all dirtbags,” Lauffer recounted in his deposition. ”Do we agree on that?” Lauffer said he and Kompothecras disagreed.
Balot, via Zitani, said Lauffer’s account is false. Physician’s Group respects patients and takes “their care very seriously,” he said.
Warned and Fired
Winters & Yonker moved into Kentucky around the same time Kompothecras opened clinics there. A former lawyer with the firm said he was pressured to send clients to ask-Gary clinics, and when he balked, he was fired. He is suing Winters & Yonker for wrongful dismissal. The firm denies the allegation and has filed a motion to dismiss the case.
The attorney, Anthony Gadlage, said in an interview that half the auto injury cases he handled came from ask-Gary referrals. Kompothecras clinics were at the top of a list that clients were shown, and they rarely selected anyone lower down, according to Gadlage. Since the Kompothecras clinics were more expensive, Gadlage said he started suggesting alternatives.
“Clients were getting charged for things not being done on them, charged for things that don’t need to be done, getting sent to doctors based on pecuniary interest rather than a medical one,” he said. “That is not right. These people should go to the best provider, not the highest priced to keep the law firm open.”
Gadlage said he received two warnings from Donald Matthew Kannady, the managing attorney in Louisville, to increase referrals to Kompothecras clinics, and was fired soon afterwards. “I was told: ‘Hey, Gary is not happy and if business doesn’t improve, he will pull the plug’” on referrals to Winters & Yonker from ask-Gary, Gadlage said.
Ron Green, a lawyer representing the firm, said Gadlage is a “disgruntled former employee who was terminated,” and his allegations are “without factual basis.” In court filings, Winters & Yonker denied Kannady made the remarks Gadlage attributed to him.
Sharon Langford of Louisville, Kentucky, said Winters & Yonker steered her to a Kompothecras clinic and told her she couldn’t use her private health insurance. As a result, Langford said she was deprived of less-expensive treatment at prices available through her health policy. Winters & Yonker sends patients to Kompothecras clinics in exchange for client referrals, she alleged in a lawsuit filed last year.
After the clinic recommended surgery, her Winters & Yonker lawyer told her the operation would have to be done in Florida, according to Langford, who said the law firm paid for the flight and hotel. A Physician’s Group surgeon performed vertebral-fusion surgery on Langford at Lakewood Ranch Medical Center, a Bradenton, Florida, hospital in September 2008.
Unknown to Langford at the time, what she paid for the surgery was much more than the norm because of an agreement between the hospital and a company linked to Physician’s Group officials, according to Samuel B. Carl, the attorney Langford hired to sue Winters & Yonker.
Langford ended up paying $27,497 for Lakewood Ranch’s medical services, but the payment didn’t go to the hospital, records of the transactions show. Instead they went to a company called LWR Capital Inc., which bought the rights to collect on the bill.
The hospital received a check for $10,115 for the Langford surgery from LWR seven days after the operation, according to a copy of the check. LWR also wrote a check for $800 to the hospital’s anesthesiologist. Both checks were signed by Physician’s Group’s David Balot and carried the address of the company’s Sarasota headquarters. LWR’s 2008 incorporation papers names Gregory Zitani, Physician’s Group’s general counsel, as its registered agent.
The $27,947 that Langford paid was more than double the $11,300 price that health insurers typically pay hospitals for fusion surgeries, according to Vimo Inc., a Palo Alto, California, market researcher.
Jim Wilson, Lakewood Ranch’s chief executive, said the hospital sells LWR the rights to collect surgery bills from all patients sent to the hospital by Physician’s Group. LWR pays the hospital 35 percent of the billed amount.
LWR and other companies that buy medical bills ”enable patients to receive the quality care they need,” Zitani said. We are proud of the ethical and quality services LWR provides.”
The final cost of Langford’s medical treatment -- including 158 charges for five months of visits to Kompothecras clinics -- was $65,559. The money came from a $200,000 insurance settlement Winters & Yonker negotiated. The law firm received $71,601 in fees and expenses, leaving Langford with $62,840, the smallest share. Because the surgery in Bradenton failed to relieve her pain, Langford said she had to have another fusion operation in Kentucky last month.
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