Racketeering charges: Doctors win latest round in court battle against HMOs

Managed care plans say ruling also sends them a positive message about where the litigation is headed. Appeal is still up in the air.

By Tanya Albert, AMNews staff. April 8, 2002.

A physician lawsuit accusing managed care companies of violating federal racketeering laws can go forward as is, a federal appeals court has ruled.

Managed care companies argued that the proposed class action case filed on behalf of physicians nationwide should go to arbitration rather than proceed in court. But a three-judge panel from the 11th U.S. Circuit Court of Appeals in Atlanta said arbitration isn't necessary.

The court in March agreed with the physicians' claims that alleged conspiratorial behavior isn't governed by arbitration clauses in their HMO contracts.

Physicians say that decision -- which upheld the lower court decision -- keeps their case intact and moves them a step closer to starting discovery, the next step in the legal process that will allow them a look at companies' internal documents and an opportunity to interview employees and officers.

"We are confident that when discovery is permitted that the practices of managed care companies will be revealed," Texas Medical Assn. President Tom B. Hancher, MD, said. "As physicians, we feel this is going to be a huge victory."

"The most important thing is discovery," added David Cook, interim executive director of the Medical Assn. of Georgia. "This is going to allow us to start peeling back the layers and start looking at what is going on."

The TMA, MAG and the California Medical Assn. sued several managed care companies, including Humana Inc. and CIGNA Corp., accusing them of violating the federal Racketeer Influenced and Corrupt Organization Act. The Florida Medical Assn. later joined the suit. About 20 individual physicians have filed the same type of suit in federal courts in seven states since January 2000. Because the claims are so similar, all of the lawsuits have been sent to U.S. District Court Judge Federico A. Moreno in Miami for pretrial hearings. [...]