No fraud, just expired contract, says HMO

HEALTH service provider Medocare said there was no fraud or misrepresentation in its failure to provide continued health coverage to over 1,000 policemen and firemen, reminding the complainants that the service contract between the agency and the members of the Public Safety Savings and Loans Association Inc. (PSSLAI) expired last July.

In a statement, Medocare Health Systems Inc. said its contract with the PSSLAI “was validly terminated and extinguished at midnight of July 31, 2015, as provided for and expressly agreed upon [by the parties] themselves” in the contract they signed on Aug. 18, 2014.

PSSLAI, set up by policemen, firemen and their families in 1997, earlier filed suits against Medocare before the Quezon City regional trial court, Securities and Exchange Commission, and Department of Health for allegedly failing to comply with its obligation to provide continued services to more than 1,000 PPSLAI members who are in good standing and who are carrying cards issued by Medocare.

Responding to the suit, Medocare explained that while it may be true that some of the PSSLAI members were issued Medocare cards with validity extending beyond July 31, 2015, the coverage for those members were subject to the terms of the August 2014 contract.

Null and void

Thus, the Medocare membership cards with validity beyond July 31, 2015 were issued in contravention of or in violation of the August 2014 contract and therefore “clearly null and void,” the Health maintenance organization’s lawyers, Teodoro Jumamil and Stanley Gotohio said in their answer submitted last Dec. 14 to the QCRTC.

Medocare asked the court to be awarded P6.5 million in moral and exemplary damages, attorney’s fees and litigation costs for PPSLAI’s “malicious filing of [its] baseless and unfounded complaint,”

“Medocare should not be blamed since PSSLAI had always known that the contract would terminate at midnight of July 31, 2015, as clearly expressed in the same. PSSLAI had the duty to inform its members of the correct termination date but it did not. What is controlling between Medocare and members of PSSLAI is not the erroneous Medocare membership cards but the stipulations as stated in the contract,” the lawyers added.

Medocare said it first entered into contract with PSSLAI, through its vice chair and chief executive officer Lucas Managuelod, sometime in 2012. The first year of the contract had enrollees number 3,239 from PSSLAI. In the second year of the contract, the enrollees numbered 3,117 while in the third, set for the period August 2014 to July 2015, there were only 1,000 enrollees.

Medocare claimed PSSLAI demanded an P800-per member mark-up and a 12-percent commission which had accumulated to more than P10.86 million through the years. In return, Medocare said, Managuelod verbally committed to have a minimum of 3,000 enrollees.

Not eligible to enrol

In a meeting last March, PSSLAI reportedly told Medocare that the bulk of their members were no longer eligible to enrol in the program being offered by Medocare. Medocare had offered a higher rate to compensate for the lower number of enrollees but this was not accepted by PSSLAI.

Due to losses incurred from the PSSLAI account, stemming from the expected low volume of enrollees and high utilization rate, and other fees paid to PSSLAI, the contract between the two parties was not renewed, the lawyers said.