Federal Court Rejects Appeal by Managed Care Companies to Move Physician Lawsuit to Arbitration

A federal court in Atlanta last Thursday rejected an appeal by a group of managed care companies to have a proposed class-action lawsuit filed against them on behalf 600,000 doctors decided by arbitration rather than in court, the New York Times reports. A panel of the 11th U.S. Circuit Court of Appeals in Atlanta upheld a December 2000 ruling by U.S. District Judge Federico Moreno that allowed the plaintiffs to proceed with some of their claims in court, "reject[ing]" the MCOs' "effort ... to derail" the lawsuit. The suit, which began in Miami, claims that nine managed care companies -- Aetna Inc., Health Net Inc., Cigna Corp., UnitedHealth Group Inc., Humana Inc., PacifiCare Health Systems Inc., Wellpoint Health Networks Inc., Coventry Health Care of Georgia and Prudential Insurance Co. of America -- breached contracts and defrauded doctors in violation of the federal Racketeer Influenced and Corrupt Organizations Act, the Employee Retirement Income Security Act and state laws. In the appeal, six of the managed care companies argued that the lawsuit had to be decided by arbitration, not in court. Aetna, Humana and Cigna did not join the appeal. The appeals court ruling will allow the plaintiffs to proceed with the case on RICO and related claims, according to Archie Lamb, a lawyer for the doctors. Lamb added that lawyers for the plaintiffs would now ask Moreno to "reschedule a timetable" to require the managed care companies to provide business records that the plaintiffs say support their claims (Freudenheim, New York Times, 3/16). Last June, Moreno postponed a decision on a request by the plaintiffs for access to computerized information collected by the managed care companies (California Healthline, 6/13/01). Harley Tropin, a lawyer for the plaintiffs, said that the appeals court decision against the managed care companies represents a "major, major blow to [the MCOs'] efforts to derail" the lawsuit (Dorschner, Miami Herald, 3/16). However, Stephanie Kanwit, general counsel of the American Association of Health Plans, said that the ruling represents "a victory for the health plans." She said that the lawsuit, which includes doctors who have different types of contracts with the managed care companies, will fall into "a procedural morass" as a result of the decision (New York Times, 3/16).