What to Expect from RICO Lawsuit Settlements

What the suits were all about

At the direction of your House of Delegates and Board of Trustees, Texas Medical Association joined the antiracketeering lawsuits against the nation's largest HMOs in March 2001. We went to the courthouse as a last resort - after watching these plans duck our strong state laws and block passage of a federal Patient Bill of Rights.

Our goal was to win a federal court order to end the HMOs' fraudulent and extortionate practices, including denying and delaying payments for procedures that patients need and forcing physicians into contracts that fail to cover the cost of providing care. We also sought a way for our member physicians to recover at least some of the payments that had been denied them because of the health plans' illegal business practices.

Of the 11 original defendants, six have already agreed to settle the case with the nation's physicians. They are, in order of the settlement dates, Aetna, CIGNA, Health Net, Prudential, WellPoint/Anthem, and Humana. The remaining defendants scheduled to go to trial Sept. 18, 2006, in a Miami federal court are Coventry Health Care and United HealthCare.

The Aetna and CIGNA Settlements

First Aetna and then CIGNA came to the settlement table. Together they offered more than $1 billion worth of changes in how they do business with you, your colleagues, and your patients. For example:

  • No more automatic downcoding,
  • Fair coding and bundling rules,
  • Transparent fee schedules and payment rules,
  • An appropriate definition of medical necessity, and
  • Prompt payment of your claims, and many, many more improvements.

To extend even further the value practicing physicians will receive from the settlements, Aetna has agreed to fund the  Physicians' Foundation for Health Systems Excellence  and CIGNA has funded the  Physicians' Foundation for Health Systems Improvement . Overseen by TMA and 20 other medical societies who signed the settlements, these foundations will convene the world's best experts to evaluate proposals and award grants for programs that enable practicing physicians to:

  • Practice medicine more efficiently and promote the delivery of high quality medical care,
  • Apply the latest technological and clinical developments to enhance the delivery of high quality medical care, and
  • Improve the health status and well-being of your patients through innovative patient safety and disease management strategies.

In addition, Aetna agreed to distribute $100 million evenly among all of the nation's 700,000 physicians as relief for past damages. Doctors were notified in August 2003 of their choice to receive their portion in cash or to donate it to the Physicians' Foundation for Health Systems Excellence.

CIGNA also repaid physicians for past bundling and downcoding errors. CIGNA committed a minimum of $40 million for this (with no limit to the amount it will pay for valid claims submitted). The company agreed to reprocess ALL documented claims involving claims bundling or coding edits or medical-necessity grounds that had been fully adjudicated from Aug. 4, 1990, to Sept. 5, 2003. CIGNA agreed to reprocess these claims under the new settlement rules. Physicians who did not want to submit documentation could elect to share in a $30 million settlement from CIGNA. Physicians could choose to take their share in cash or donate it to either the TMA Special Funds Foundation or the Physicians' Foundation for Health Systems Improvement.

Health Net and Prudential

Both Health Net and Prudential Financial agreed to settle their portions of the federal antiracketeering lawsuit. Health Net, which does not currently operate in Texas, agreed to pay $40 million in damages to physicians and make an estimated $80 million worth of physician- and patient-friendly changes to its business practices. Prudential, which no longer writes health insurance, agreed to pay $22.2 million to physicians.

Any physician who provided covered services to any patient covered by Health Net or any of the other defendant health plans (Aetna, Anthem, Coventry, CIGNA, Humana, PacifiCare, Prudential, United Healthcare, and WellPoint) from Aug. 4, 1990, through and including May 10, 2005, is a member of the settlement class and entitled to a share of the $40 million. Physicians who provided large volumes of covered service to patients through Health Net, and retired or inactive physicians or the estates of deceased physicians, may receive a larger share.

The deadline for filing a claim was Sept. 21, 2005. All of the details are in the settlement notice.


Physicians have until Nov. 17, 2005, to claim their share of the $135 million WellPoint/Anthem settlement.  Many physicians do not realize that WellPoint, Inc., is the parent company of more than a hundred health plans and other entities that go by different names.  If physicians treated patients under any of WellPoint's subsidiaries , they are eligible to file a claim. 

WellPoint Health Networks, which operates Unicare in Texas, is the latest health plan to settle the national class-action antiracketeering lawsuit that TMA and other state medical societies brought against the country's largest for-profit HMOs. The settlement includes $135 million to pay physicians for past damages and $250 million in pro-patient, pro-physician changes in WellPoint's business practices. "Whether through settlement or an actual trial, the physicians of Texas are confident that this suit will help us overcome the obstacles that stand between our patients and the quality health care they need and deserve," said TMA President Bob Gunby, MD.

Even if they did not treat patients covered by a WellPoint or Anthem health plan, physicians are eligible for payment under the WellPoint/Anthem settlement if they have treated patients covered by one of the health insurers involved in the class-action antiracketeering lawsuit brought by TMA and other medical societies against the for-profit managed care industry. They include CIGNA Corp., Aetna, Inc., Coventry, Health Net, Inc., Humana, Inc., PacifiCare Health Systems, Inc., Prudential, and UnitedHealth Group, Inc.

Humana: Another One bites the Dust

Like six other HMOs before it, Humana has agreed to settle our national antiracketeering lawsuit before the class-action case goes to trial. Humana agreed to make many of the same propatient, prophysician business process improvements that its six predecessors did. Humana also agreed to pay physicians $40 million for past abuses. "Thousands of physicians and their professional associations and representatives have worked long and hard for this agreement," said our co-lead outside counsel, Archie Lamb. "As in previous settlements, the agreed upon landmark business practice changes will result in a more efficient health care system for all concerned and redirect precious resources to the care of patients."

The deadlines for physicians to file a claim for past damages in this case was Feb. 17, 2006. Please be sure to read carefully the "Mailed Notice of Proposed Humana Settlement to Class Members" below.

What else?

If you have any questions, please take a look at these Web sites:

How the Aetna Settlement Helps the Physician Practice  ( PDF )
HMO Settlements
CIGNA Physician Settlement
HMO Crisis Update
TMA's Legal Action Against Managed Care Organizations

Last Updated On

September 30, 2010

Originally Published On

March 23, 2010

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Court Cases | Managed Care | RICO