Humana settles class-action suit with physicians

One more domino has fallen, as Humana Inc. has settled class-action claims filed by more than 700,000 physicians alleging unfair reimbursement practices by HMOs.

The settlement earned preliminary approval Oct. 19 from U.S. District Judge Federico Moreno in the Southern District of Florida, Miami Division. The agreement, valued at more than $75 million, includes paying $40 million to physicians for past claims and up to $18 million to cover attorney fees.

The company also committed to making changes in the way it handles claims going forward, including creating a more transparent payment process and reducing administrative complexity in the claims payment system.

Archie Lamb, co-lead counsel representing individual doctors and medical associations in the class-action cases, said the business practice changes would be important for "the benefit in time and energy savings" they would offer physicians.

Humana President and CEO Michael B. McCallister said the changes set the stage "for real-time adjudication of claims filed electronically."

"This has all been part of Humana's ongoing efforts to strengthen its collaborative relationships with providers," he said.

Humana becomes the seventh of the original 10 HMO defendants to settle claims, following Aetna, Cigna Healthcare, Health Net, Prudential Insurance Co. of America, and WellPoint (including claims against WellPoint Health Networks and Anthem).

The settlements stem from lawsuits filed by physicians who allege that the HMOs conspired to systematically underpay doctors by downcoding and bundling claims.

Only Coventry, PacifiCare Health System and UnitedHealthcare -- the latter two of which have announced plans to merge -- have not settled.

A trial for those insurers is set to begin Jan. 23, 2006.