Miami Judge Grants Doctors Class-Action Status in Lawsuits against HMOs but Denies Patients
Insurance companies yesterday "suffered a major setback" but also gained a "key victory" as a U.S. district judge approved a class-action lawsuit for up to 600,000 doctors suing HMOs for alleged fraud but denied class-action status on similar charges for millions of HMO patients, the Los Angeles Times reports (Lee/White, Los Angeles Times, 9/27). U.S. District Court Judge Federico Moreno wrote in his "highly anticipated" ruling that HMOs -- including Aetna, United Healthcare, Cigna, Coventry Health Care, WellPoint, Humana Health Plan, PacifiCare Health Systems and Anthem Blue Cross Blue Shield -- "systematically obstruct, reduce, delay and deny payments and reimbursements to health care providers." Lawsuits from around the country against these insurers were consolidated in Miami two years ago, and Moreno wrote yesterday that the physician "plaintiffs have done more than just allege a common scheme. They have demonstrated facts which support its existence" (Marcus, Fort Lauderdale Sun-Sentinel, 9/27). At a potential trial scheduled for May 19, lawyers for the physicians intend to show evidence that HMOs' "procedures and computer systems are designed to delay or deny legitimate payments" to providers, the New York Times reports. In the meantime, Moreno ordered the two parties to agree on a mediator by Oct. 30 and report on settlement talks by March 20 (Freudenheim, New York Times, 9/27). Lawyers representing the patients seeking class-action status argued that HMOs violated the Racketeering Influenced and Corrupt Organizations Act by "conspiring to withhold medical care and by not telling HMO members" that their doctors received financial incentives to control costs (California Healthline, 3/18). But Moreno said HMO members will have to sue their health plans individually because the number of potential class-action plaintiffs -- up to 145 million -- would have been "unmanageable," and lawyers "failed to prove that the insurance companies engaged in a 'common scheme,'" the Miami Herald reports.
Both HMO supporters and doctors' attorneys claimed victory after yesterday's rulings. "Physicians around America have won a major victory today. This will be seen as a turning point for true health care reform," Archie Lamb, an Alabama lawyer representing the doctors, said. If the physicians are successful, it could mean "significant money" paid by HMOs, according to the Herald (Dorschner, Miami Herald, 9/27). However, Dr. Alan Garber, director of Stanford University's Health Services Research Training Program, said, "Ultimately the money here is going to be coming out of the pocket of the people who pay the health insurance premiums and for people with chronic illnesses" (Los Angeles Times, 9/27). HMOs said they plan to appeal Moreno's ruling to a federal appeals court in Atlanta (New York Times, 9/27). Speaking on the lawsuits filed by HMO patients, Karen Ignagni, president of the American Association of Health Plans, said, "Today's ruling validates our contention that these lawsuits are without merit and should be dismissed" (Fort Lauderdale Sun-Sentinel, 9/27). The Wall Street Journal reports that Moreno's ruling "effectively ends" litigation for HMO members and "signal[s] a turning point in the managed-care industry's legal wars" (Wall Street Journal, 9/27). Lawyers for the patients said their lawsuit could have been "the next big tobacco" and might have fundamentally changed the way HMOs do business (Miami Herald, 9/27).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.