News in brief - Sept. 4, 2000

Mixed decisions in two Aetna lawsuits - Cutting hospitalization saves little - Bias in drugmaker-financed studies - Pa. finds widespread late payments - Consumer ads raise demand - Mail-order drug sales up 27% - D.C. collective negotiations bill stalled - Judge nixes Conn. HMO formulary suit - Okla. HMO liability law under attack - PhyCor gets delisted

Sept. 4, 2000.

Mixed decisions in two Aetna lawsuits

It was win one, lose one for Aetna U.S. Healthcare in two separate lawsuits filed against the insurer.

On Aug. 11, the U.S. Circuit Court of Appeals for the Third Circuit upheld a lower court ruling dismissing a class-action consumer lawsuit, Maio v. Aetna Inc., filed against the insurer in April 1999, alleging that Aetna engaged in racketeering by falsely promising patients high-quality care while pressuring doctors to cut costs.

The appeals court upheld the U.S. District Court in Eastern Pennsylvania's ruling last year that the plaintiffs did not prove they had suffered injuries because of Aetna's actions.

But the Supreme Court of California, County of San Diego, ruled Aug. 11 that the lawsuit Ross v. Aetna can proceed to the discovery stage. That lawsuit, filed by the consumer group Foundation for Taxpayer and Consumer Rights, alleges that Aetna engaged in false advertising and marketing of its health plans.

D.C. collective negotiations bill stalled

A collective negotiations bill recently signed by Washington, D.C., Mayor Anthony Williams is stalled before the congressionally appointed D.C. Control Board, which oversees the district.

The board's challenge of the bill's financial impact statement means that the bill probably won't be reviewed by Congress until next year. Because a new Congress will be in session, the bill may have to be passed a second time by the District, the D.C. Medical Society reports.

Judge nixes Conn. HMO formulary suit

A federal judge has thrown out a class-action lawsuit by the state of Connecticut against Physicians Health Services alleging that PHS injured consumers by limiting its drug formulary based on medication costs rather than quality.

Okla. HMO liability law under attack

The Oklahoma Assn. of Health Plans has filed suit against the state's new HMO liability law, claiming that it is unconstitutional and preempted by federal law.

But the measure, which became law in April, is patterned after a Texas law that overcame legal challenges in a federal appeals decision on June 20. That decision applies only to Louisiana, Mississippi and Texas.

PhyCor gets delisted

PhyCor, a Nashville-based physician practice management company, was scheduled to be delisted Aug. 25 from the Nasdaq National Market. The firm said its ticker symbol would be moved to Nasdaq's lower-profile Over-The-Counter Bulletin Board.

In August, PhyCor warned of charges totaling more than $407 million related to the write-down of recently sold physician practice assets. The charge was the difference between the practices' book value and the actual selling price.

The write-down meant PhyCor no longer met Nasdaq's minimum tangible asset requirement for listing on the national board. PhyCor stock was once $35 per share but has closed for as little as 14 cents. The firm expects further charges as it ceases some operations and restructures others.

For its second quarter ending June 30, PhyCor reported a net loss of $426.8 million, or $5.80 per share, on net revenues of $258 million.