Judge Allows Some Patient Claims in Managed Care Lawsuits to Proceed
A federal court judge in Miami yesterday "refused to dismiss" several key claims in lawsuits filed in 1999 on behalf of health plan members against six managed care companies for allegedly "employing hidden financial incentives for physicians to deny treatment and cut costs," the Wall Street Journal reports. The lawsuits claim that six companies -- Aetna Inc., Health Net Inc., Cigna Corp., UnitedHealth Group Inc., Humana Inc. and PacifiCare Health Systems Inc. -- violated federal civil racketeering laws (Geyelin, Wall Street Journal, 2/21). In a 45-page decision, U.S. District Court Judge Federico Moreno "threw out racketeering claims by 10 of the 16 plaintiffs" in the lawsuits (Levick, Hartford Courant, 2/21). He also ruled that plaintiffs could proceed with claims against the health plans for "breach of fiduciary duty" (Wall Street Journal, 2/21). The lawsuits claim that the companies imposed "gag clauses" that prevented doctors from "explaining to patients all their treatment options or how the health plans chose ways to manage care" (Dorschner, Miami Herald, 2/21). However, Moreno dismissed racketeering claims in lawsuits filed on behalf of plaintiffs in California, New Jersey, Florida and Virginia, which do not allow private lawsuits for insurance fraud. He also ruled that under the 1974 Employee Retirement Income Security Act, plaintiffs could not proceed with claims against the health plans for "allegedly applying a more restrictive interpretation" of "medical necessity" when they make treatment decisions than they have disclosed. The lawsuits seek damages "on the grounds that the managed care plans that members buy are worth less than what they cost because of hidden measures to restrict access and deny treatment" (Wall Street Journal, 2/21). However, managed care companies argue that employers, who "knew exactly what they were doing in seeking the best health care possible for their employees at the most reasonable cost," purchased most of the health plans (Miami Herald, 2/21).
The South Florida Sun-Sentinel reports that the decision represents a "measured victory" for plaintiffs in the lawsuits and a "blow to the managed care industry" (Shields, South Florida Sun-Sentinel, 2/21). The ruling will allow plaintiffs in the case to have access to "troves of internal documents" of the health plans through pretrial fact finding (Wall Street Journal, 2/21). According to plaintiffs' attorney Richard Scruggs, "The industry has been gloating that all these cases were going to be dismissed. This was a major victory for the subscribers to HMOs" (Shields, South Florida Sun-Sentinel, 2/21). "We're pleased that this decision will allow all the core issues in this case to go forward," plaintiffs' attorney Stephen Neuwirth added (Miami Herald, 2/21). However, Stephanie Kanwait, senior vice president for public policy at the American Association of Health Plans, said that health plans also "claimed a victory because Moreno's ruling shrank the scope of the case significantly" (Bloomberg News/Arizona Republic, 2/21). AAHP spokesperson Susan Pisano said, "Obviously, we would prefer that these suits not continue to exist. However, today's ruling is important to us because it dismisses significant portions of the suits" (South Florida, Sun-Sentinel, 2/21). Cigna said in a statement that the lawsuits have become "much narrower" as a result of Moreno's decision (Wall Street Journal, 2/21).
The Wall Street Journal reports that Moreno's decision yesterday also "raises the stakes in the judge's next big decision: whether to allow the suits to proceed as class actions" (Wall Street Journal, 2/21). According to the South Florida Sun-Sentinel, class-action certification represents a "nightmare" for the managed care industry. The class could include 46 million plaintiffs nationwide (South Florida Sun-Sentinel, 2/21).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.