Health Net, Prudential settle physician lawsuits

Medical leaders hope remaining health plans will resolve lawsuits in which doctors claim that companies improperly reimbursed them.

By Damon Adams, AMNews staff. May 23/30, 2005.

In its proposed settlement with physicians, California-based Health Net plans to improve how it does business with doctors, including speeding up claim payments and creating an external board to resolve billing disputes.

A proposed agreement with Prudential Insurance of America contains monetary compensation for doctors but doesn't include systematic changes because the company sold its health care subsidiary, Prudential Health Care.

The two settlements, announced May 3, won't translate to much cash for the more than 700,000 physicians involved in the case that challenged the way insurance companies reimburse them. But medical association leaders said the deals, like previous agreements with Aetna and CIGNA, are more about improving physician practices than getting a check.

"It's the future [of medicine] that gets a huge gain here," said Jack Lewin, MD, chief executive officer of the California Medical Assn., one of the groups that sued health plans over the way doctors were paid. "It's going to be a pleasure to sit down with Health Net and work out problems across the table rather than lawyer to lawyer."

Physicians' attorneys said system changes by Health Net, which covers 6.5 million people in 27 states and Washington, D.C., could be worth about $300 million to doctors.

Jay Gellert, president and CEO of Health Net, said settling was the right thing to do for physicians and the company. Health Net agreed to pay $40 million to physicians and about $20 million for plaintiffs' legal fees.