Blues settlement in class-action suit shifts focus to last HMO holdouts

Only two defendants are left in mass physician litigation that challenges how health plans pay doctors.

By Amy Lynn Sorrel, AMNews staff. May 21, 2007.

Closing what the nation's physicians hope is one of the final chapters in their nearly decade-long stand against the managed care industry, the Blues are the latest health plans to settle doctors' claims of improper payment practices.

In the April deal that includes 900,000 physicians, the BlueCross BlueShield Assn. and more than 30 of the nation's Blues and their subsidiaries agreed to pay doctors $128 million and make several business changes. The agreement mirrors previous settlements in a federal class-action lawsuit involving multiple insurers. Medical and legal experts say the successes have forced changes in doctors' relationships with the industry.

Physicians see this settlement as a particular victory because the Blues are one of the country's largest health plans, covering 98 million lives. They hope the agreement will compel the two companies remaining in the class-action litigation -- UnitedHealthcare and Coventry Health Care -- to follow other insurers' lead.

Some experts say the Blues settlement signals an era of cooperation that inevitably will affect other insurers.

"The marketplace is going to demand that they make the same changes or employers won't contract with them, and as a result, they are going to be left behind," said Ohio lawyer Randall S. Rabe, who specializes in managed care litigation at Nelson Levine de Luca & Horst.

He said the case has drawn attention to health plans' business practices in general and could spark other regional lawsuits challenging them if they are inappropriate.