A profitable Greater Rochester Independent Practice Association subsidiary reneged on a compensation agreement, sending sums that contractually should have gone to him to GRIPA instead, a former consultant to the group claims.
John Haughton M.D. of Maryland claims much of the responsibility for helping GRIPA develop Cognisight LLC, a medical consulting business and wholly owned GRIPA subsidiary that, according to court papers Haughton filed this month, has reaped annual profits in the $6 million range.
The roughly 900-doctor GRIPA is a physician organization half-owned by doctors affiliated with Rochester General Health System and half-owned by RGHS. Currently negotiating a contract with Excellus BlueCross BlueShield to create what could be this area's first accountable care-type organizations, it is one of only a handful of physician groups nationally to have won clinical integration certification.
The clinical integration designation, granted by the Justice Department to physician organizations that can demonstrate a high level of care coordination, exempts recipients from bargaining constraints imposed on other physician groups under the Sherman Antitrust Act.
GRIPA founded Cognisight in 2002, winning contracts to help health insurers such as the Buffalo-based Independent Health Association Inc. maximize returns on Medicare Advantage claims.
A 2008 GRIPA newsletter identifies Cognisight as an important source of revenue for GRIPA and praises Haughton, whom it called Cognisight's consulting medical director, as "a widely respected expert who is working with us in this venture."
Haughton's lawyer, Mark Moretti of Phillips Lytle LLP, declined to comment beyond what is stated in court papers.
In a complaint first filed last month in the state Supreme Court here and transferred at GRIPA's request to the Rochester U.S. District Court in January, Haughton accuses Cognisight of failing to honor a contract calling for it to pay him 8 percent of its net profit annually.
After paying him $153,000 in 2008 and $478,000 in 2009, the GRIPA subsidiary delayed paying his share of Cognisight's 2010 profit despite putting the payout on its books and continuing to use his services well into 2011, Haughton claims.
An expert in medical-information technology with an undergraduate degree in electrical engineering, Haughton describes his initial contribution to Cognisight in court papers as crucial to the GRIPA subsidiary's development of a system to take full advantage of a Medicare claims system.
Known as HCC, an acronym for hierarchical conditions categories, the Medicare claims system is one he helped the Centers for Medicare and Medicaid Services develop and is not always easy for insurance companies to navigate, Haughton claims.
"Not all Medicare health insurance plans take full advantage of the HCC Methodology," his court complaint states.
After GRIPA abruptly fired its president and CEO, Gregg Coughlin-who also had headed Cognisight-and followed by firing most of Cognisight's staff, Cognisight leaned heavily on him for technical advice and to reassure antsy clients, particularly its biggest account, Independent Health, Haughton claims.
Coughlin and former Cognisight executive vice president Betsy Gaffney separately sued GRIPA in a 2011 state court action. Coughlin won a partly favorable decision in state Supreme Court in July of that year. Sworn testimony and a settlement agreement concluding their dispute were sealed.
In a July 2011 ruling, state Supreme Court Justice Kenneth Fisher cites Coughlin's and Gaffney's refusal to agree to incentive payment terms sought by GRIPA and to sign a non-compete agreement as the reason for their Dec. 16, 2010, dismissal.
Michael Wolford of the Wolford Law Firm LLP, who defended GRIPA and Cognisight in the Coughlin and Gaffney suit and is defending them against Haughton's claim, declined to comment on either case.
Fisher said Coughlin was entitled to collect $270,833 in severance but could not claim the 2.5 percent of 2010 profits to which he believed he was entitled. The 2.5 percent award would have amounted to $129,000, Fisher stated.
State Supreme Court Justice Matthew Rosenbaum, who took over the case from Fisher, in a later decision denied Gaffney's claim to a similar bonus.
Coughlin and Gaffney now run DxID LLC, an East Rochester-based Cognisight rival, as co-CEOs. Billing itself as a provider of HHC services, DxID lists Haughton as a consulting risk advisement adjuster.
Haughton's complaint does not put a dollar amount on his claim against Cognisight. Figures that Fisher states in the Coughlin decision would put the value of Haughton's claim for 8 percent of Cognisight's $5.1 million 2010 profit at $414,720.
According to Haughton's court papers, GRIPA CEO Joseph Vasile M.D., an RGHS psychiatrist who replaced Coughlin, responded to Haughton's final demand for payment in a September 2011 letter. Vasile praised his past contributions but instead of an 8 percent bonus proposed to pay a flat $25,000 for his 2010 service. The GRIPA CEO offered to continue in a "mutually beneficial relationship" but left financial terms unstated, Haughton contends.
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