HMO Group Sues O.C. Over Health Plan

SANTA ANA — A large national health-care company filed a lawsuit in Orange County Superior Court on Monday to stop the county and Cal-OPTIMA, the county’s new managed-care system for the poor, from enrolling 300,000 Medi-Cal recipients.

Maxicare Health Plans Inc., which operates health maintenance organizations in several states, says Orange County failed to obtain proper federal approval and illegally spent public funds in establishing Cal-OPTIMA.

Ronald Diluigi, assistant director of the Orange County Health Care Agency, said he could not comment on the suit, which county officials were reviewing Monday.

Cal-OPTIMA executives could not be reached for comment late Monday.

The 60-page complaint alleges the county and the state failed to obtain a federal waiver of Medicaid rules in order to establish Cal-OPTIMA.

“Compliance with federal Medicaid statutes and regulations is mandatory, unless the federal government grants California a waiver of the requirements,” the suit reads.

Maxicare says the state “did not even submit an application for a waiver . . . until April, 1995.”

Maxicare says the county has received no assurances that a waiver will be granted.

Cal-OPTIMA is a state and county experiment to cut costs of health care to the poor and provide more access. Many physicians and other providers have shunned Medi-Cal because of the paperwork burden and low rates of reimbursement.

So far, about 40 health-care providers throughout the county have contracted to provide care under Cal-OPTIMA, including long-term Medi-Cal providers as part of doctor-hospital groups, HMOs and other large networks such as UC Irvine and the Friendly Hills Health Care Network.

Cal-OPTIMA’s HMO participants include Kaiser Foundation Health Plan, FHP International Corp. and PacifiCare Health Systems.

Maxicare is a subsidiary of MHP, which operates federally qualified HMOs in California, Indiana, Illinois, Louisiana, North Carolina, South Carolina and Wisconsin with more than 320,000 enrolled customers, including 30,000 Medicaid recipients, according to the lawsuit.

The company asked the court for a preliminary injunction to prevent Cal-OPTIMA from enrolling Medi-Cal recipients, which had been scheduled to begin this week.