Health Net, Prudential settlements OK'd

A federal judge in September approved proposed class-action settlements between more than 700,000 physicians and insurers Health Net and Prudential Insurance of America.

The settlements are worth more than $60 million in cash for doctors and potentially hundreds of millions of dollars in future improvements, as HMOs strive to live up to agreements to make the billing and reimbursement process easier for doctors.

According to the settlement, Health Net will pay $40 million to physicians and about $20 million for doctors' legal fees. It also agreed to improve its claims processing system and establish an external board to resolve billing disputes.

Prudential will pay about $22 million, which will be used mainly to assist physicians in ensuring that HMOs comply with the agreements. Prudential sold its health care business in 1999, so its settlement did not include prospective system improvements.

Prudential spokesman Bob DeFillippo said the company did not admit to any wrongdoing and that "not going to trial was in everyone's best interests."

Health Net spokeswoman Marian Cutler said that the company is "just happy this is finally behind us."

The approval by U.S. District Judge Federico A. Moreno in Miami closes the book on two more of the original 10 HMO defendants that physicians accused of conspiring to systematically underpay doctors by downcoding and bundling claims.

Only Coventry, Humana, PacifiCare Health System and UnitedHealthcare -- of which the latter two have announced plans to merge -- have not settled. A trial for those insurers is scheduled to begin Jan. 23, 2006.

In a statement, AMA Chair Duane M. Cady, MD, said the recent string of settlements "demonstrates that health plans are beginning to realize the value of restoring working relationships with physicians." He said the Association is hopeful that the remaining defendants will settle.

For more information on the settlements, physicians can visit the HMO Settlements Web site (link).