United-Health Net deal survives legal challenge

The arrangement gives UnitedHealthcare renewal rights for Health Net's members in the Northeast.

By Emily Berry — Posted Aug. 16, 2010

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A Connecticut judge has dismissed a lawsuit challenging the state insurance commissioner's swift approval of UnitedHealthcare's deal to absorb Health Net's membership in the Northeast.

The Connecticut State Medical Society filed the lawsuit in January, claiming that Insurance Commissioner Thomas Sullivan didn't give proper weight to arguments against the deal before approving it in December 2009.

Connecticut Superior Court Judge Carl Schuman dismissed the lawsuit in an order July 28, saying the society failed to prove it had a "specific personal and legal interest" in the deal.

Sullivan declined to comment on the ruling.

Matthew Katz, executive vice president of the medical society, said his organization disagreed with the order. "It is Connecticut physicians who provide the medical care to the patients of Connecticut that health insurance is supposed to pay for," he said.

But Katz said the society will not appeal the ruling because it would be too expensive.

The United-Health Net agreement was announced July 20, 2009. United said it would pay as much as $630 million for renewal rights for Health Net's members in Connecticut, New York and New Jersey. The final amount will depend on how many of Health Net's 578,000 members in those states renew with United.

Katz said that because United was allowed to buy Health Net's membership rights, Connecticut physicians have less leverage in negotiating contracts, which negatively affects patients' access to care.

Regulators in both New Jersey and New York also signed off on the acquisition. Those approvals went unchallenged.

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