State medical society lawsuits now target insurance contract provisions

All-products clauses and financially driven performance ratings are among the health plan techniques doctors are fighting.

By Amy Lynn Sorrel, AMNews staff. March 26, 2007.

Physicians had successes in their landmark class-action suit challenging insurer payment practices. But physicians say other contract provisions doctors view as abusive show that health plans might not be serious about long-term change.

The lawsuit that began in 1999 was the first nationally organized effort by physicians to take on managed care in the courts. Now physician organizations are applying what they learned from that litigation to new lawsuits taking on different health plan techniques.

The Medical Society of the State of New York last September filed a class-action antitrust lawsuit against the merged Oxford Health Plans and United Healthcare. The organization is contesting an "all-products clause" that requires doctors to be in both networks or to drop out.

Also in September, the Washington State Medical Assn., several doctors and the American Medical Association/State Medical Societies Litigation Center filed a breach-of-contract and libel lawsuit challenging Regence BlueShield's performance-based network. Physicians argued that it unfairly ranked doctors by using claims data, rather than medical records.

In December 2006, Regence agreed to drop the system. Doctors still are pursuing defamation claims against the insurer for sending letters to patients stating that their physicians did not meet the network's standards.

The Michigan State Medical Society in 2004 challenged Blue Cross Blue Shield of Michigan with a lawsuit accusing the insurer of unilaterally altering doctors' PPO agreements to apply to self-funded employer plans with which doctors were not contracted. The Michigan Osteopathic Assn. also joined in the suit.