WellPoint settles class-action lawsuit; will holdouts follow?

Four HMOs are left to defend charges of underpayments.

By Mike Norbut, AMNews staff. Aug. 1, 2005.

Insurance giant WellPoint Inc. has become the latest managed care company to settle class-action claims filed by more than 700,000 physicians. The company agreed last month to pay $198 million and make business changes in response to claims by doctors that HMOs have failed to reimburse them fairly.

Attorneys and medical societies involved in the class-action cases are hoping the July announcement of the latest agreement will generate momentum that could compel the remaining insurance companies to settle before the Jan. 23, 2006, scheduled trial date. Adding WellPoint, the nation's largest private health insurer with about 28.5 million members, to the list of completed deals is significant because it puts the physicians' case back in the public eye, they said.

"I think this certainly has the possibility to fast-forward all of this," said Tim Norbeck, executive director of the Connecticut State Medical Society, one of 18 medical societies WellPoint lists as endorsing the agreement. "I wouldn't be surprised if we get several others reasonably soon. The more we get, the more pressure there will be on the others to settle."

In addition to establishing a $135 million settlement fund, WellPoint will contribute $5 million to a foundation designed to promote higher quality health care for underserved patients. The company also will pay as much as $58 million in legal fees.

WellPoint also has pledged to make about $250 million in infrastructure changes to ease communication and reimbursement problems physicians have encountered with the company.