HMO LAWSUITS: CMA Suit Targets Three Insurers’ Tactics

      Adding to the mounting number of lawsuits targeting managed care, the California Medical Association yesterday filed a civil lawsuit against three for-profit managed care companies, charging them with intimidating physicians and interfering with doctor-patient relationships for financial gain, the New York Times reports (Freudenheim, 5/26). Filed in U.S. District Court in San Francisco, the suit names WellPoint Health Networks' Blue Cross of California, the Health Net unit of Foundation Health Systems and PacifiCare Health Systems as defendants (Gentile, AP/Newsday, 5/26). The three companies together provide coverage for 9 million California residents. The CMA, which has 34,000 physician members, filed the suit under the Racketeer Influenced and Corrupt Organizations Act, alleging that the insurers used "coercive, unfair and fraudulent means to dominate and control physician-patient relationships for their own financial gain, to the detriment of both patients and physicians." Doctors said that they became increasingly frustrated after negotiations with managed care companies failed to produce higher reimbursement rates and less restrictive oversight guidelines. CMA President Dr. Marie Kuffner said, "We got promises, we got intentions, but we didn't get definitive results that we could bring back to our physicians" (New York Times, 5/26). Asserting that the low reimbursement rates were jeopardizing patient care, Kuffner added, "We cannot continue to allow our patients' health to be jeopardized by corporate greed" (Friedland, Wall Street Journal, 5/26). Rather than asking for a monetary reward, the suit asks for the "near-dismantling of managed care" and urges the federal government to regulate certain practices, including:

• when and how patients can be referred to specialists;
• quality assurance programs and audits;
• drug formularies;
• capitation payments; and
• medical necessity guidelines.

Without Merit?
      While the CMA is one of the most influential medical associations in the country, Walter Zelman, president of the California Association of Health Plans, called the suit a "publicity stunt." He said, "This is a relatively groundless legal attack which is more about public relations and politics than it is about finding genuine solutions" (Bernstein/Maharaj, Los Angeles Times, 5/26). PacifiCare spokesperson Ben Singer said the suit is "misguided and it does nobody any real good," while Foundation's Lisa Kalustian added, "The only winners will be the attorneys, not the physicians, the patients or our health care systems." Still, some industry analysts argue that the CMA's suit could have a major impact on managed care. "This is the best-organized and best-financed medical group in the country," one analyst noted.

Jumping on the Band Wagon?
      Already the AMA, the New York State Medical Society and the Georgia Medical Society have filed class action lawsuits against other insurers over reimbursement disputes. And, with the CMA entering the fray, other states may soon follow suit. Officials from Texas and other states' medical societies helped with the CMA's suit. Texas Medical Association Vice President Kim Ross said, "California is well suited to have a significant influence on what managed care should look like if the investor-owned companies are pushed aside" (New York Times, 5/26).