Ruling Makes Class-Action Suit More Plausible

The idea of a class-action lawsuit against HMOs was given a boost by a recent decision in a federal district court in Florida. Meanwhile, the Blue Cross and Blue Shield Association has sounded the alarm that efforts to increase health plan liability may be launched in at least eight states.

In a Feb. 20 decision, U.S. District Court Judge Federico Moreno refused to dismiss claims in several 1999 lawsuits filed on behalf of health plan members against six health plans.

The six are Aetna, Health Net, Cigna, UnitedHealth Group, Humana, and PacifiCare Health Systems.

The suits allege that plans used financial incentives for physicians that ultimately led to denials of care.

In his 45-page decision, Moreno threw out racketeering claims by 10 of the 16 plaintiffs, allowing six to proceed.

Claims against the health plans for breach of fiduciary duty were also allowed to be pursued.

The suits claim that the companies’ gag clauses prevented physicians from explaining all the treatment options and how managed care companies do their jobs.

Richard Scruggs, the plaintiffs’ lawyer, says that Moreno’s ruling was a significant setback for managed care.

“The industry has been gloating that all these cases were going to be dismissed,” he told the Wall Street Journal. “This was a major victory for subscribers to HMOs.”

The American Association of Health Plans doesn’t see it that way, noting that Moreno dismissed more than half of the cases. MCOs pin the blame for any consequences resulting from incentives on employers, who chose the benefit design.

Moreno’s next decision is whether to allow the suits to proceed as class actions.

In the same month, the Blues released “Health Care and Insurance Issues: 2001 Survey of Plans,” a report that says that several states are likely to seek expanded HMO liability this year.

However, Susan Laudicina, director of state service research for the Blues and the study’s author, hastened to add that such efforts will face tough opposition. She told Business Insurance that although nearly half of the states considered expanding liability, only four actually passed such legislation.

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