Health insurer Humana Inc. reached an agreement with representatives of
more than 700,000 physicians to settle a nationwide classaction suit pending
in the U.S. District Court in Miami.
The suit was brought against several health plans under the Racketeer
Influenced and Corrupt Organizations (RICO) Act and has been led by the
California Medical Association (CMA). Filed five years ago, the class-action
suit accuses several for-profit HMOs of using coercive, unfair, and fraudulent
means to control physician-patient relationships.
In the ensuing years, physician associations in Connecticut, Georgia,
Louisiana, Texas, Florida, and other states have joined with the CMA.
According to a statement released by the company, Humana has agreed to pay
$40 million to physicians and up to $18 million in legal fees to be determined
by the court.
"Humana is pleased that we have been able to reach an agreement to
settle this litigation," said Michael McCallister, Humana's president
and chief executive officer. "We have devoted significant time and
resources to improving the quality and timeliness of our transactions with
physicians who care for our health plan members. Humana has undertaken systems
and infrastructure improvements in connection with how the company relates to
providers, enhancing, among other things, the speed and accuracy of claims
reimbursement to providers and setting the stage for real-time adjudication of
claims filed electronically. This has all been part of Humana's ongoing
efforts to strengthen its collaborative relationships with
The Connecticut State Medical Society (CSMS) released a statement about the
settlement noting that, in addition to the monetary component of the
settlement, physician groups and Humana have agreed to "new levels of
transparency and communication." Below are some of the provisions to
which Humana has agreed, according to CSMS:
At press time, the agreement still had to be approved by U.S. District
Judge Federico Moreno.
The settlement by Humana follows one in July by Wellpoint (Psychiatric
News, August 5). In that settlement, Wellpoint agreed to use a
patient-friendly definition of medical necessity and to cease using software
programs that systematically lowball or deny payment for legitimate patient
The Wellpoint settlement also provided $135 million in direct payments to
physicians to resolve allegations of unfair reimbursement for more than a
decade. Previous settlements had been reached with Aetna, Cigna, Prudential,
and Health Net (Psychiatric News, July 16, 2004; October 15,
In addition, Wellpoint agreed to apply the "patient-friendly"
definition of medical necessity outlined in the settlement to mental health
care, including substance abuse, and to treat participating psychiatrists like
other participating physicians with respect to provider directories and
"We have a good settlement in terms of psychiatric services being
treated the same as other services," psychiatrist Catherine Moore, M.D.,
a member of the CMA Board of Trustees, told Psychiatric News at the
time. "This kind of action shows the importance of physicians working
together so that we can more effectively fight these huge businesses that are
taking us to the cleaners." ▪