Humana, HMO case to proceed (6/1/2005)

For the second time, the U.S. Supreme Court has declined to block proceedings in a lawsuit accusing Humana and six other managed-care companies of conspiring to underpay doctors.

The class-action suit, on behalf of 600,000 or more physicians, claims HMOs programmed their computers to systematically lower doctors' reimbursements.

The companies had sought to put off a trial until portions of the suit are heard in arbitration. But the Supreme Court declined to review a federal appeals court ruling that the trial can go forward this fall in Miami.

The stakes are high, as shown by the large settlements by former defendants Aetna and Cigna in 2003. They totaled more than $300 million, plus more to be spent on internal reforms.

Goldman Sachs analysts wrote in a research note yesterday that the court's action could prompt remaining defendants to settle.

However, a member of the insurers' defense team said yesterday that the physicians' claims "will be revealed to be baseless no matter what forum the doctors choose."

Washington, D.C., attorney Brian Boyle said that whether the case is before an arbitrator or a court, the insurers "are entitled to insist on a careful analysis of each of the doctors' claims for additional reimbursement. And we believe that those claims will not survive individual scrutiny."

Humana, UnitedHealth Group, PacifiCare and WellPoint (formerly Anthem) are among the remaining defendants in the massive litigation, which combines lawsuits filed across the country.

Physician groups accuse the insurers of violating the Racketeer Influenced and Corrupt Organizations Act, or RICO. The act allows the collection of triple damages in fraud cases.

The companies lost a long battle to keep the case from being tried as a class action. It ended in January when the Supreme Court let stand an appeals court's ruling certifying a nationwide class-action suit.

The insurers had argued that the individual contracts doctors sign with HMOs varied so much that a class action wasn't workable.

The companies seemed to have won a round in 2003 when the Supreme Court ruled doctors' reimbursement complaints against UnitedHealth and PacifiCare should be heard in arbitration, as their contracts require. Many companies prefer arbitration, saying it is less expensive and more predictable than trials.

However, the claims that insurers conspired against doctors still remained before U.S. District Judge Federico Moreno in Miami.