Timely scrutiny of health plan consolidation

After years of plan mergers, a medical society's legal challenge provides the opportunity for one deal to get the proper attention.

Editorial. Nov. 1, 2004.

When the Medical Society of New Jersey sued to stop the merger between UnitedHealth Group and Oxford Health Plans, its quest seemed quixotic. After all, the multibillion dollar deal had already been approved by every state and federal agency necessary, including New Jersey's Dept. of Banking and Insurance. As far as investors were concerned, Oxford was no more -- United had taken it off trading on the New York Stock Exchange.

And yet, the society's lawsuit is turning out to be not such a doomed crusade after all. With a New Jersey court ruling against United's motion to dismiss MSNJ's case, the society's lawsuit could provide something the physician community has wanted for years as health plans succumbed to merger mania.

The lawsuit could prove the opportunity for a true, in-depth consideration of such deals' ability to create market-dominating plans that wield unlimited power over physicians and patient care issues.

The crux of MSNJ's lawsuit, which is receiving partial financial support from the AMA's Litigation Center, is that the New Jersey Dept. of Banking and Insurance did not truly scrutinize the United-Oxford merger. By law, it was allowed 45 days after testimony to grant or refuse its approval. The department, on July 29, announced its approval after only three days of consideration.