Court dismisses case against holdouts in class-action suit

Doctors are considering an appeal, and pursuing claims against United in state courts.

By Amy Lynn Sorrel — Posted July 9, 2007

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A federal appeals court in June threw out doctors' claims against United Healthcare and Coventry Health Care for alleged improper payment practices. But that is not stopping physicians from continuing their fight against insurers.

A unanimous three-judge panel of the 11th U.S. Circuit Court of Appeals upheld a 2006 trial court ruling that found "insufficient evidence" that the two health plans, along with eight others, conspired to use software to systematically reduce or deny reimbursements to doctors in violation of the federal Racketeer Influenced and Corrupt Organizations Act.

The decision, though, leaves the door open for doctors to pursue their original and future claims against United and Coventry in state court, according to physicians' co-lead counsel Edith Kallas.

The federal class-action lawsuit brought nearly a decade ago grew out of the consolidation of individual state and federal actions that 700,000 doctors and various state medical associations filed against 10 major insurers. Among the state claims, doctors accused the health plans of breaching their contracts with physicians and violating state prompt-pay laws as part of a larger conspiracy to defraud physicians.

Earlier settlements with other insurers named in the case prevent doctors from suing those health plans on the issue in state or federal court. But that protection does not apply to United and Coventry, Kallas said.

Doctors are considering an appeal to the full bench of the 11th Circuit. Meanwhile, they have asked the U.S. District Court for the Southern District of Florida in Miami to hand back their cases "so we can address the issues of unfair business practices and contracting with respect to state law," said Matthew Katz, executive director of the Connecticut State Medical Society.

"It certainly isn't over," he said.

At least four original state cases against United remain in Connecticut, New York, North Carolina and Tennessee, Kallas said. Doctors are considering filing additional claims against the company for abusive practices in other states. In places where arbitration agreements might preclude individual doctors from suing the insurer in court, "we are exploring class-action arbitrations," she said.

Physicians maintain that United and Coventry have treated them unfairly, and "[they] are not going to give up," Kallas added.

UnitedHealth Group Executive Vice President and Chief Legal Officer Thomas L. Strickland, in a statement, said the company was pleased that the court's decision puts the litigation to rest.

United "looks forward to continuing to work collegially with physicians and their professional organizations to improve the quality of care delivery and to simplify health care administration," he said.

Coventry did not return calls seeking comment.

Despite physicians' disappointment over the court's recent decision, they say it comes on the heels of a recent settlement victory with BlueCross BlueShield.

The BlueCross BlueShield Assn. and more than 30 Blues plans and subsidiaries in May resolved a parallel lawsuit brought by doctors involving similar allegations of unfair payment practices. The plans agreed to pay doctors $128 million, modify their payment procedures and establish independent review panels to resolve billing disputes, among other things. They admitted no wrongdoing. The settlement, which awaits final approval, follows previous agreements reached over the past four years with seven other insurers: Aetna, Cigna, Health Net, Prudential Insurance Co. of America, Wellpoint Health Networks Inc., Anthem and Humana Inc.

Doctors say those successes have improved insurers' relationships with physicians, and hope United will follow suit.

"The settlements that we have with the other companies have in effect required them to change their business practices, and the compliance dispute process has been successful in getting a lot of changes for physicians," said Donald J. Palmisano Jr., general counsel to the Medical Assn. of Georgia, one of the first organizations to file the federal lawsuit.

United was not a part of those settlement terms, "but that doesn't prevent United from voluntarily making these changes for the benefit of physicians," Palmisano said.

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