Judge Dismisses Claims Against Two Defendants
Law Feature - August 2006
By Erin Prather
U.S. District Judge Federico A. Moreno in Miami has dismissed claims against UnitedHealth Group Inc. and Coventry Health Care Inc. in organized medicine's antiracketeering lawsuit against some of the nation's largest for-profit HMOs. UnitedHealth and Coventry are the final defendants in the lawsuit by the Texas Medical Association and state and local medical societies and physicians across the country. The lawsuit, filed in 2001, charged that the companies engaged in racketeering by maintaining claims-processing practices and systems that lowered reimbursements to physicians.
Although not condoning United and Coventry's actions, Judge Moreno said he reviewed thousands of documents and determined that "there simply is insufficient evidence of the wrongdoing claimed." Two months earlier, Judge Moreno reached the same conclusion with respect to PacifiCare (which has merged with United).
He added that any reform of individual practices by HMOs is beyond his power. Anyone wanting to change the way health care is provided must either look for remedies in Congress or allow the free market to dictate the results, he wrote in his ruling.
At press time, attorneys for the plaintiffs were considering appealing the decision.
The remaining seven defendants - Aetna, Anthem, CIGNA, Foundation, Humana, Prudential, and WellPoint - have settled out of court. The value of the settlements exceeds $1.5 billion in retrospective and prospective relief, and the defendants have promised to change their procedures for reviewing and processing physicians' claims.
The following is an update on how the other defendants are complying with the settlements.
Aetna's settlement calls for payments totaling $120 million to physicians and to the Physicians' Foundation for Health Systems Excellence. The foundation is working to improve the quality of health care.
Aetna also has participated in mediation and arbitration of several issues in the settlement. After a year of negotiation, Aetna agreed to mail to every contracting physician an addendum to its contracts to make them conform to the settlement.
Nick Roth, JD, an Alabama attorney representing the physician class, TMA, and four other state societies, says Aetna is fighting plaintiffs on complying with settlement terms.
For example, Aetna routinely denies reimbursement to emergency physicians treating patients with symptoms of acute coronary conditions requiring an electrocardiogram. The company denies the code (CPT code 93010: electrocardiogram with at least 12 leads, interpretation and report only) when billed in conjunction with an evaluation and management (E&M) code (CPT codes 99281-99285). This code is routinely denied even when the E&M code includes the modifier 25 indicating that the E&M service and the 93010 procedure were separate and identifiable from one another. This violates settlement provisions that require Aetna to recognize both the E&M code and a service procedure code when the appropriate information is provided.
Thousands of hours have been spent to ensure compliance on the part of Aetna. Thanks to the help of TMA and other medical associations and societies, those issues are being resolved. Physicians should see positive changes in how Aetna processes its claims."
Mr. Roth says physicians who discover that Aetna's policies, procedures, or practices violate the settlement terms of their contract with Aetna should file a report with the compliance dispute facilitator. The facilitator will review the issue and determine if Aetna is adhering to the settlement. If not, the matter will be called to Aetna's attention under a process set out in the settlement. There is no cost to the physician.
"Physicians must use this tool. The settlement is only as good as the physicians' willingness to avail themselves of it," he said.
The forms physicians need to file a complaint are posted on the TMA Web site in the HMO Antiracketeering Lawsuit Settlement Enforcement Toolkit at www.texmed.org/rico and on the HMO Settlements Web site at www.hmosettlements.com.
CIGNA has funded the Physicians' Foundation for Health Systems Innovation with $15 million. It has paid $30 million to physicians filing Category A claims and placed $40 million in a fund to pay for claims physicians filed under Category One, Two, or Three. More than $130 million has been claimed thus far.
Two lawsuits were filed by physicians who had contracted with either the Managed Care Advisory Group (MCAG) or Redstone Financial Services LLC. The companies are helping physicians collect payments in CIGNA Category One, Two, and Three.
MCAG and Redstone alleged CIGNA violated the settlement by delaying payment and influencing the third-party administrator, Poorman-Douglas Corp., to deny claims. Both suits went to arbitration. The Redstone claims were settled for a confidential amount, with adjustments, if the full $40 million allocated by CIGNA for settlement payments is not exhausted by other claims. The MCAG claims are still pending.
MCAG Chief Executive Officer Tim Schmidt said most physicians "probably won't see their CIGNA claims paid till the end of 2006. Beyond that, we have had a lot of success filing claims on behalf of physicians in subsequent settlements such as Anthem/WellPoint, HealthNet and Humana."
Health Net is to pay $39 million to physicians and $1 million to a fund to pay for compliance enforcement. Mr. Roth expected physicians to see payments from the Health Net settlement this summer. Payment has been held up by interveners who have challenged the settlement. At press time, none had been successful.
"The settlement administrator has already processed all of the claims. All they need to do is divide everything up and cut the checks. That money should have been in the physicians' hands in July," he said.
Prudential will contribute $22 million, plus interest from May 3, 2005, to a compliance fund. A tax-exempt nonprofit entity, the Physicians Advocacy Institute, Inc. (PAI), has been created to receive the money. It will address abuses of managed care, assist physicians in assuring compliance, and address future health plan practices that prevent or hinder doctors from being paid fairly. These funds were held up by interveners but the funds were expected to be distributed last month.
TMA is represented on the PAI Board of Trustees, as are nine other medical societies active in the litigation. Two physician representatives, chosen by the plaintiff's attorneys, also will be on the board.
Anthem/WellPoint will distribute $130 million to physicians and $5 million to a nonprofit foundation. It also will fund a compliance dispute facilitator to represent physicians who have compliance issues with the settlement.
As in other settlements, physicians may donate their shares to the Physicians' Foundation for Health Systems Innovation or to another foundation, such as the TMA Special Funds Foundation at 401 W. 15th St., Austin, TX 78701. Both foundations are IRC 501c3 tax-exempt organizations; contributions are tax deductible for most contributors. (For specific tax advice, consult with your tax advisor, accountant, or attorney.)
Humana will pay $40 million to physicians. Humana values the required changes to its business practices at $75 million.
At press time, appeals by interveners were pending in both the Humana and Anthem/WellPoint settlements. The plaintiffs are actively seeking to resolve that appeal. Once resolved, the funds will be distributed, and the prospective relief of the settlement terms will be operational.
The RICO settlements are hundreds of pages long, with many attachments. TMA has worked with other state medical societies and the American Medical Association to develop and distribute educational materials so physicians can take advantage of the settlement terms.
You can review the materials on the TMA Web site at www.texmed.org/rico.
Erin Prathercan be reached at (800) 880-1300, ext. 1385, or (512) 370-1385; by fax at (512) 370-1629; or by email at Erin Prather.
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