Court rejects claims against Blues holdouts in pay lawsuit

Although a federal trial judge in March threw out physicians' claims against about a dozen Blues plans for alleged improper payment practices, the ruling is not stopping physicians from continuing a crusade against insurers' tactics.

Judge Federico A. Moreno in the U.S. District Court for the Southern District of Florida upheld a prior administrative order that found inadequate support for doctors' claims that the health plans conspired to manipulate software to systematically reduce or deny reimbursements in violation of the federal Racketeer Influenced and Corrupt Organizations Act.

Physicians are considering an appeal to the 11th U.S. Circuit Court of Appeals. The decision also leaves doctors the option to pursue claims in state courts against the individual Blues plans, according to physicians' co-lead counsel Edith M. Kallas.

"This is not over yet," she said.

The federal class-action lawsuit grew out of the consolidation of individual state and federal actions that 900,000 doctors and various state medical associations filed against Blues plans across the country. In places where arbitration agreements might preclude individual doctors from suing in court, "we are also considering class-action arbitrations," Kallas said.

Blue Cross of Idaho, one of the plans dropped from the case, said it will defend vigorously any further actions. Meanwhile, the company "continues its business goal of working smoothly with physicians in the delivery of services to our members," spokeswoman Karen Early said.

Seth Jacobs, general counsel for Blue Shield of California, also dismissed, said the company "had been fair and honest." He called the accusations "totally unfounded."

While the physicians lost the recent trial court ruling, they have settled with more than 90% of the nation's Blues plans named in the original action.

In 2007, the BlueCross BlueShield Assn. and more than 30 Blues plans and subsidiaries agreed to pay doctors $128 million, modify their payment practices and establish independent review panels to resolve billing disputes, among other things. The Blues plans admitted no wrongdoing.

The settlement mirrored previous agreements reached in a parallel physician class-action suit with seven other major insurers: Aetna, Cigna, Health Net, Prudential, Wellpoint, Anthem and Humana.

The 11th Circuit in 2007 dismissed UnitedHealthcare and Coventry Health Care from the case.

Since then doctors have had some success pursuing other legal action against United. Physicians in September 2008 won certification of a class-action arbitration claim they filed against Oxford Health Plans in New York, a United subsidiary. United did not return calls for comment.

"To the extent that physicians and medical associations continue to have issues [with insurers], we will continue to address them," Kallas said.

Meanwhile, doctors say the settlement successes have helped improve their relationships with insurers. But they remain vigilant in ensuring that health plans stick to their promises.

As insurers' payment practices evolve, "it's just an ongoing challenge to make sure that what they agreed to in the settlements they are doing," said Robert W. Seligson, president of the Physicians Advocacy Institute Inc. The organization was set up with some of the earlier settlement funds to enforce insurers' compliance with the agreements. Seligson also is CEO and executive vice president of the North Carolina Medical Society, a plaintiff in the class-action suits.

Though in its early stages, the Blues settlement has yielded relatively few complaints, said attorney Deborah Winegard, a facilitator appointed to help doctors resolve compliance disputes. Compliance began in October 2008, and coding provisions took effect in January.

"We hope the plans have taken this seriously and done everything they can to comply," she said.

Lawyers and organized medicine also say physicians need to be alert to problems and report them to help ensure the agreements' effectiveness.

The Blues disputes filed thus far highlight long-standing issues, Winegard said.

For example, top complaints include problems with physicians recovering overpayments to plans and insurers' determinations of the "usual, customary and reasonable" pay rates.

Winegard said physicians' awareness of the latter likely has been heightened by a recent settlement between United and New York's attorney general halting use of out-of-network UCR calculations derived from an allegedly faulty United-owned database, called Ingenix.

The AMA and other medical associations also are engaged in ongoing litigation against several other plans that allegedly shortchanged doctors using the controversial database.

Michael A. Pope, lead counsel in the Blues settlement, said the agreement was intended to re-establish good relationships between doctors and the plans, and both sides "have accomplished that and shown their good will."

Doctors hope the non-settling plans will follow.

"But with companies that have not reached a settlement, the challenges are greater," Seligson said.