Massive HMO suit gets thumbs up

In what is being seen as a huge victory for physicians, a federal appeals court upheld class-action status for a lawsuit alleging that several major health insurers had systematically underpaid them.

The decision by a panel of the 11th U.S. Circuit Court of Appeals in Atlanta is a turning point in the case, legal experts said. Without such status, the 900,000 active and retired physicians represented would have had to pursue their claims individually.

Archie Lamb, co-lead counsel representing the physicians and medical societies, was pleased.

"Five years ago when we first filed, the ripple of laughter was fairly loud," he said. "...The vindication that is evident in this ruling is something that all the medical society leaders and doctors ought to be extremely proud of."

The health plans involved are Health Net, Humana, PacifiCare Health Systems, Prudential Insurance Co. of America, UnitedHealthcare and Wellpoint Health Networks. Aetna and CIGNA Corp. previously reached settlements with physicians for $120 million and $85 million respectively. The decision heightens pressure on the others to settle, legal experts said.

A March court date has been set for the lawsuit, which will be tried under the federal Racketeer Influenced and Corrupt Organizations Act in the U.S. District Court for the Southern District of Florida in Miami.

Kent Jarrell, health plan spokesman, said insurers had not decided whether to appeal, but they felt being tried under the RICO statute would work to their advantage. "There's a higher burden of proof with RICO, and that's why we feel confident about the merits of our case," he said.

The impact of the class action on the insurance industry could be massive. The insurers' appeal claimed a negative verdict could bankrupt the industry, but Appellate Court Judge Gerald B. Tjoflat dismissed this concern in the court's ruling.

"If their fears are truly justified, the defendants can blame no one but themselves," he wrote.

"It would be unjust to allow corporations to engage in rampant and systematic wrongdoing, and then allow them to avoid a class action because the consequences of being held accountable for their misdeeds would be financially ruinous."