Health Net, Prudential Agree to Settlements in Physician Lawsuit Against Health Insurers
Health Net and Prudential Insurance Company of America have agreed to pay a combined $80 million to settle claims in a racketeering lawsuit brought by more than 700,000 physicians against six of the largest U.S. health insurers, the AP/Orlando Sentinel reports (AP/Orlando Sentinel, 5/4).
In the lawsuit, physicians allege that Humana Health Plan, PacifiCare Health Systems, UnitedHealthcare, WellPoint Health Networks, Anthem Blue Cross and Blue Shield and Health Net delayed or denied reimbursements for health services and illegally rejected claims for necessary medical treatments as part of a racketeering conspiracy. Aetna and Cigna, which also were named as defendants in the lawsuit, have settled with the physicians for a total of $1.01 billion (California Healthline, 1/3).
Prudential has agreed to pay $22.2 million to fund efforts to monitor and improve compliance by HMOs (AP/Orlando Sentinel, 5/4). Prudential sold its health insurance business to Aetna in 1999 (Dorschner, Miami Herald, 5/4).
Under the settlement, California-based Health Net has agreed to pay $40 million to doctors to settle the claims, as well as $20 million in legal fees. The company also agreed to develop a better definition of medical necessity for procedures and a streamlined system for doctors' complaints and payments. The changes are expected to cost more than $80 million over four years. To account for the settlement, Health Net plans to record a pretax charge of $66 million in the first quarter of the fiscal year.
A hearing to receive preliminary approval of the settlement from U.S. District Judge Federico Moreno in Miami is set for May 6. A final hearing date will be set later.
Jay Gellert, president and CEO of Health Net, said the settlement "will allow us to continue to enhance our working relationship with the physicians who serve our members. It will put a potentially contentious matter behind us" (AP/Orlando Sentinel, 5/4).
Prudential spokesperson Laurita Warner said, "In making this agreement we have not admitted any wrongdoing, but we do agree with the plaintiffs that it would not be in the best interests of either side to go through a costly trial."
Harley Tropin, co-lead counsel for the doctors, said, "We're proud to announce these two settlements came as a result of a lot of work and pushing by the court. We look forward to trying the rest of the case against the remaining defendants in September."
Kent Jarrell, a spokesperson for the insurers still involved in the suit, said he could not comment on the settlements (Miami Herald, 5/4).