Class-action lawsuit: Another setback for managed care

A physician win on a preliminary ruling in a major lawsuit is one more sign of managed care's once-infallible and now-failing immunity in the courts.

Editorial. Nov. 18, 2002.

A U.S. district judge's decision to grant class-action status to the plaintiffs in racketeering lawsuits filed against several major health insurers marks a significant blow to the managed care industry.

Aetna Inc., CIGNA Corp., Humana Inc., Foundation Health Systems Inc., PacifiCare Health Systems, Prudential Insurance Co., UnitedHeathcare and Wellpoint Health Networks Inc. could find themselves squaring off against as many as 600,000 physicians -- if the ruling sticks.

Judge Federico A. Moreno, of the U.S. District Court, Southern District of Florida, Miami Division, said he was granting class action status because the physician and medical association plaintiffs had proved that if what they are claiming is true, all doctors would be affected. They allege that health plans breached contracts and defrauded physicians in a variety of ways, including using automated systems to bundle or downcode claims, setting up bonus or incentive systems for claims employees and making medical necessity determinations based on nonmedical criteria.

The health plans, which deny the charges, already have appealed Moreno's ruling to the 11th U.S. Circuit Court of Appeals. They argue that there is "substantial weakness" in the judge's view that common issues will predominate at trial. The defendant health plans also claim that the magnitude of the relief sought raises the costs and stakes of the litigation, creating "improper coercive pressures" on them. [...]