Our Causes and Charities
March 27, 2001
3 State Groups Join Doctors in Insurer Suit
By MILT FREUDENHEIM
The state medical associations of California, Georgia and Texas joined
individual doctors from seven states yesterday in a federal lawsuit that
accused eight health insurers, including Aetna Inc. and the Cigna
Corporation, of engaging in "a pattern of racketeering activity" to deny
necessary medical care.

The state organizations, which represent more than 75,000 doctors, contend
that the insurers had used "cost-based criteria to approve or deny claims"
for payment and had offered cash incentives to claim reviewers who would
deny or limit tests and treatments that doctors felt were necessary.

The plaintiffs included individual doctors from Alabama, California,
Colorado, Florida, Georgia, Kentucky and Texas.

The case is being heard by Judge Federico A. Moreno of Federal District
Court in Miami. In addition to Aetna, based in Hartford, and Cigna, based in
Philadelphia, the defendants are Coventry Health Care Inc. of Bethesda, Md.;
Humana Inc. of Louisville, Ky.; the United Health Group of Minnesota; the
Prudential Health Care unit of Aetna and three California companies: Health
Net Inc., Pacificare Health Systems and Wellpoint Health Networks.

Spokesmen for several companies, including Aetna, Cigna and Wellpoint, said
last night that they had not seen the complaint and could not comment.

"As a general matter, many of these suits are similar, and we continue to
believe they are without merit," said David Carter, a spokesman for Aetna.
"We will continue to aggressively defend these actions and are confident
that we will prevail, based on the merits, if the actions ultimately go
forward."

The doctors charged that the companies had decided which claims to pay using
guidelines based on "purported actuarial criteria, unrelated to medical
necessity." They contend that the insurers had developed the guidelines with
Milliman & Robertson, an actuarial firm; InterQual, a consulting firm, and
others.

The plaintiffs added that the companies used software sold and licensed by
McKessonHBOC Inc. and others that changed standard codes describing
treatments to reduce payments. InterQual, Milliman & Robertson and
McKessonHBOC are not being sued.

The complaint amended an earlier filing that Judge Moreno had rejected for
not clearly showing how the insurers could be accused of violating
anti-racketeering laws. The new complaint contends that the companies "have
undertaken a common scheme to systematically deny, delay and diminish
payments to health care providers" in violation of provisions of the federal
Racketeer Influenced and Corrupt Organizations Act.

Twenty doctors made specific complaints against insurers they had dealt
with, including violations of state laws calling for prompt payment of
insurance claims. For instance, Michael Burgess, a Texas obstetrician, said
he had been "a victim" of inappropriate determinations of medical necessity,
wrongful denials and delayed payments by Aetna, United Health and
Prudential.

The complaint said the companies had used third-party reviewers, including
Protocare Inc. of Santa Monica, Calif., formerly called Value Health
Sciences Inc. Protocare is not being sued.

The doctors said the reviewers had paid "direct bonus payments and other
benefits to claims reviewers who deny a certain percentage or absolute
number of submitted claims" regardless of whether those claims or hospital
admissions were medically necessary.

Kim Ross, a vice president of the Texas Medical Association, which has
37,000 members, said the group's governing board had approved joining the
suit after hearing from members. Dr. Jim Rohack, president of the Texas
association, said that "some, not all, investor-supported health plans" had
skirted state laws and regulations and had prevented "patients from
receiving appropriate medical care."

"The Texas Medical Association is not against all managed care plans," said
Dr. Rohack, who is the medical director of Scott & White, a group practice
and nonprofit health plan in central Texas. "But we had to enter the legal
arena to ask a federal judge to stop these abusive practices."

Marie Kushner, a former president of the California Medical Association,
with 30,000 members, said, "This drastic measure by tens of thousands of
physicians is unavoidable because so many other attempts to end these abuses
have been largely futile."

Paul Shanor, executive director of the Georgia Medical Association, with
8,000 members, said doctors in the state "have been frustrated by not
receiving the pay that they are supposed to receive under contracts with the
insurance industry and Georgia law."

Archie Lamb, the lead lawyer for the doctors, said that participation by
"three of the most influential medical associations rebuts the industry's
contention that the complaints of physicians are isolated or anecdotal or
trial-lawyer driven."

"Right now," Mr. Lamb said, "the health plans only accountability is to Wall
Street."

Judge Moreno is hearing a group of lawsuits filed on behalf of health plan
subscribers. He is expected to rule on May 7 on whether to approve
class-action status for the suits by both doctors and subscribers.

The managed-care companies are also facing suits seeking class-action status
in courts in California, Connecticut and New York. Last week, a five-judge
appeals court in New York unanimously upheld the decision by a State Supreme
Court judge to hear a suit accusing Prudential Health Care of breach of
contract, deceptive trade practices and fraud.

Cases in California state court are also proceeding against Kaiser
Permanente and Aetna after motions to reject the suits were dismissed.
 
 

Copyright 2001 The New York Times Company