New war of lawsuits erupts over back pain procedure

WEST PALM BEACH — A long-standing controversy over a back procedure performed on car accident victims has sparked a new war of lawsuits between insurance giant State Farm and doctors and workers from a local surgery center.

State Farm Insurance Co. filed a federal lawsuit early Tuesday against Palm Beach Lakes Surgery Center doctors Jeffrey Kugler, Jane Bistline and Jonathan Cutler as well as two men who helped managed the practice – Gary Carroll and Mark Izydore. The suit alleges the group worked with a medical manufacturer and local law firms to inflate prices for unnecessary medical procedures that cost the insurers more than $13 million.

The doctors fired back with a defamation suit against State Farm in Palm Beach Circuit court just hours later, claiming the insurance company’s allegations are part of a scheme to keep from paying claims.

“This is not something new. This is what State Farm does when there’s a threat to their bottom line” Anthony Vitale, one of the surgery center’s attorneys, said of State Farm’s suit. “It’s a completely bogus lawsuit.”

Surgery center attorney Robert Wilkins filed the suit on behalf of the doctors along with Miami attorneys Michael Kauffman and Vitale, who said the groups traded lawsuits Tuesday after State Farm pulled out of an agreement the parties reached in 2008 not to sue one another. Attorneys for the surgery center had sued State Farm earlier that year but later dropped the suit.

At the center of both suits are a diagnostic test and a procedure called a percutaneous discectomy, a minimally-invasive back procedure which doctors say alleviates back pain.

At the surgery center, Bistline performed the diagnostic test and Kugler and other doctors performed the back procedure using a controversial medical device called the SpineWand.

Cutler, one of the surgery center’s founders, also founded the company DiscoCare to distribute the SpineWand. Cutler later sold the company to ArthroCare for $25 million.

By March of this year, SpineWand manufacturer ArthroCare had paid nearly $7 million in settlements to insurance companies – including $2.5 million to State Farm – over objections to billing practices of the DiscoCare subsidiary, according to filings with the U.S. Securities and Exchange Commission.

State Farm attorneys in Tuesday’s suit say the surgery center’s doctors engaged in a fraudulent billing practices They also name Kugler and Bistline’s private practices as defendants.

The suit alleges that Carroll and Izydore, a convicted felon, coordinated the doctors’ activities and maintained relationships with personal injury attorneys “to knowingly profit from the medically unnecessary procedures, according to the suit. The insurers claim Carroll and Izydore used their management company, Palm Beach Practice Management, Inc., another listed defendant, to funnel profits from the procedures.

Although the firm wasn’t named as a defendant in the suit, State Farm attorneys named the local law firm Steinger, Iscoe and Greene in their lawsuit, saying the firm represented at least 59 patients who had the procedure.

David Spector, the West Palm Beach attorney who filed State Farm’s suit, declined to comment on the case Tuesday, as did State Farm Florida spokesman Chris Neal, saying the litigation was ongoing.

According to the doctors’ suit against State Farm, the Florida Department of Health in 2008 dismissed accusations State Farm filed against them a year earlier alleging fraud.

Vitale says that State Farm’s tactics are similar to the attacks they launched against the use of other medical procedures, like the MRI, when they were first introduced.

The surgery center’s attorneys in their suit against State Farm said leading medical schools, including Harvard Medical School, John Hopkins University and Stanford Medical School, all teach their students the back procedure.

As for the number of surgery center patients who were also Steinger firm clients, Vitale said there’s nothing wrong with doctors and accident injury attorneys referring patients to one another.

He called the allegations yet another ploy from the insurance company to keep their profits high.

“What they’re doing is taking every pretext they possibly can to deny every patient their right to treatment,” he said.