Physicians Win Key Victory In Suit Against Insurers

Physicians have won another victory in their lawsuit charging eight major insurance companies with violations of the federal Racketeer Influenced and Corrupt Organizations (RICO) Act.

Last month a three-judge panel of the 11th U.S. Circuit Court of Appeals in Atlanta upheld the federal class-action certification of the physicians by U.S. District Judge Federico Moreno in September 2002. The judges, however, ruled against class-action certification for violations of state laws concerning prompt payment and breach of contract.

A March court date has been set for hearing the case, which will be tried in the U.S. District Court for the Southern District of Florida.

Writing for the panel, Judge Gerald B. Tjoflat dismissed the defendants' argument that class-action status should be denied because of the possibility of severe financial harm to the insurance industry.

“It would be unjust to allow corporations to engage in rampant and systematic wrongdoing, and then allow them to avoid a class action because the consequences of being held accountable for their misdeeds would be financially ruinous....

“We are courts of justice and can give the defendants only that which they deserve; if they wish special favors such as protection from high, though deserved, verdicts, they must go to Congress.”

Specific allegations of the lawsuit are that the insurance companies“ covertly manipulate, maneuver, and exploit long-standing, accepted industrywide practices for financial gain; capitation payment schedules are founded on actuarially unsound principles and are manipulated by defendants to increase their profits at the expense of physicians who provide medical services” (Psychiatric News, February 6).

The lawsuit was brought by 15 medical associations. The class of physicians consists of those who provided medical services insured by any defendant between August 4, 1990, and September 30, 2002.

Aetna and CIGNA Corp. previously reached settlements with physicians for $120 million and $85 million, respectively (Psychiatric News, July 16).

[Leonard J. Klay, M.D., et al. v. Humana Inc., et al., No. 02-16333, 11th Cir.]

Information about the lawsuit, including a copy of the ruling, is posted online at<www.calphys.org/html/bb672.asp>, the Web site of the California Medical Society. ▪