A federal judge held Kentucky's Cabinet for Health and Family Services in contempt Monday.
U.S. Senior Judge Karl Forester said in an order that the decision was for the Cabinet's refusal to process requests by patients to transfer away from Coventry Cares, a managed-care organization, in light of Coventry's impending termination of its provider contract with Appalachian Regional Healthcare.
"The Court concludes that ARH established by clear and convincing evidence that the Cabinet violated Court orders to process thousands of requests by ARH patients to transfer from Coventry to WellCare of Kentucky Inc. for 'cause' in an expeditious manner," the order said. "The Cabinet took practically no steps to comply with the Court's order."
Forester said in his order Monday that "the Court will make a decision regarding any possible sanctions against the Cabinet at a later date."
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ARH operates eight hospitals and other health clinics in the region. Coventry is one of three companies that the state hired Nov. 1, 2011, to manage care for the 560,000 Kentuckians enrolled in the federal-state health-care program for the poor and disabled.
When Coventry said in late March that it would sever its contract with ARH on May 4, the hospital chain filed a lawsuit in U.S. District Court in Lexington asking for a preliminary injunction to prevent the termination.
Forester granted temporary injunctive relief in June and said Coventry Cares must continue its contract with ARH through Nov. 1, 2012, to meet the medical needs of 25,000 Eastern Kentucky Medicaid patients.
Last week, ARH filed a motion asking Forester to hold the Cabinet in contempt for not processing requests by patients to transfer away from Coventry Cares to Wellcare, the only other managed care organization that has a contract with ARH.
In Forester's order Monday, he said approximately 6,000 transfer requests were being held by the Cabinet.
Forester's order said the Cabinet will not be required to complete those requests at this time, but it is ordered to proceed promptly with an open enrollment period to all Kentucky Medicaid beneficiaries between Aug. 20 and Oct. 19.
In response, Cabinet spokeswoman Jill Midkiff said Monday that the "Cabinet appreciates that the Court recognizes the need to allow the Medicaid program to proceed with open enrollment so as not to cause a gap in service or confusion for members."
"Member support is extremely important and the Cabinet remains committed to listening to concerns from Medicaid members about their managed care company, as well as medical providers."
Meanwhile, Steve Price, an attorney for ARH, praised the court's decision.
"We're glad that the court has called the Cabinet to task on this and said that they need to follow what the court says and they need to carry through on promises that they've made to the court also," Price said.