Health Plan of Nevada loses bid to dismiss lawsuit over hepatitis C

Facing a new judge, Health Plan of Nevada on Tuesday lost its attempt to dismiss a lawsuit brought by two former clients who say they contracted hepatitis C infections after treatment by former doctor Dipak Desai.

Ruling from the bench, Clark County District Judge Elissa Cadish did not give detailed reasons for her decision or allowing the attorney for patients Donald Lynam and David Magana to file amended complaints they hope will make a stronger case. At the heart of their lawsuit for unspecified damages is the argument that the HMO had included Desai in its network of physicians and clinics, so it was obligated to policyholders to guarantee safe and competent treatment.

In making the roster, Desai and other doctors had to pass muster with a Health Plan of Nevada committee that issues credentials.

“If they (Health Plan of Nevada) are doing a credentialing process, don’t they have to do it in a nonnegligent way?” Cadish asked at one point. “Otherwise, why do it?”

Cadish was assigned the case, one of about three dozen seeking compensation from the HMO for Desai’s unsafe practices, in September after Clark County District Judge Douglas Smith recused himself. Smith had dismissed the case once and was overturned by the Nevada Supreme Court, but still expressed skepticism about the its legal validity.

Smith stepped out after attorneys for the patients challenged his impartiality, alleging that he was a subordinate to Health Plan of Nevada attorney Mark Hutchison within the local leadership of the Church of Jesus Christ of Latter-day Saints. But insurance company attorneys argued that Hutchison had no authority over Smith and that their being Mormons would not compromise Smith’s impartiality any more than it would with people of other faiths.

Hutchison stepped out of the case to remove any potential conflict, but the Nevada Supreme Court last week declined to reinstate Smith.

Health Plan of Nevada attorney Lee Roberts argued that state law did not require HMOs to look over the shoulders of their network members after reviewing their qualifications initially. Doing so would make this form of health insurance “vastly more expensive” and upend their traditional role as carrying lower premiums than policies allowing patients to see any doctors they want.

Penalties for any shortcomings should come from the Nevada Division of Insurance and not a jury, he said.

But patient attorney Matthew Sharp contended that creating a network and funneling HMO members into it was all that mattered.

“With control comes responsibility,” he said. “It’s that simple.”

In another case earlier this year, Clark County District Judge Timothy Williams ruled that Health Plan of Nevada had a duty to monitor its network. That laid the foundation for a $524 million jury verdict in favor of two former Desai patients.

Contact reporter Tim O’Reiley at toreiley@reviewjournal.com or at 702-387-5290.