Special E-Mail Bulletin
January 2004
RICO issues in class-action case against HMOs can go forward
Special E-Mail Bulletin
Hi, everyone.
Several times in the past three years I've sent you bulletins about the consolidated class-action lawsuit filed against several HMOs over alleged payment irregularities. Just recently the judge hearing the case announced that he would allow the RICO (racketeering) issues to go forward. This is a case you should be watching.
This story is from the January 12 issue of AM News.
Gil Weber
Court leaves RICO charges against plans intact
Physicians and health insurance companies are still awaiting an appeals court ruling on a lower court judge's decision granting class-action status to the lawsuits.
By Tanya Albert, AMNews staff. Jan. 12, 2004.
The nation's 700,000 physicians involved in class-action litigation against a half-dozen of the largest health insurers can go forward with their claims that the companies violated federal anti-racketeering laws originally designed to punish organized crime.
U.S. District Court Judge Federico A. Moreno of the Southern District of Florida Miami Division ruled in December 2003 that physicians can pursue claims under the Racketeering Influenced and Corrupt Organizations Act. That means that if physicians are able to prove their claims, they would be entitled to three times the damage awards.
Managed care companies involved in the litigation tried to get the RICO claims thrown out of court, arguing that private plaintiffs aren't entitled to that relief. But Moreno disagreed.
"The court finds that RICO authorizes the injustice and declaratory relief that [physicians] are seeking," he said in his ruling.
The class-action lawsuits, consolidated from lawsuits filed by individual physicians and several state and county medical associations across the country, accuse United Healthcare Inc, Humana Inc., Anthem Inc., WellPoint Health Networks, PacifiCare Health Systems Inc. and Coventry Health Care Inc. of employing business practices that were unfair to physicians, such as using computer systems that arbitrarily rejected physician claims for payment.
Doctors sued under RICO because they claim the companies use "investment and reinvestment of [racketeering] income to operate, expand and perpetuate" their businesses.
Aetna Inc. and CIGNA Corp. in 2003 settled with physicians. In addition to some financial compensation, the companies agreed to disclose more about their payment methods and agreed to other business practice changes that doctors believe will improve their relationships with insurers. Lawsuits against the six companies that haven't settled are scheduled to go to trial in Miami in June.
But the health plans and physicians are still awaiting a ruling from the 11th U.S. Circuit Court of Appeals in Atlanta on the class-action status of the lawsuit. Health plans challenged Moreno's October 2002 decision to allow the lawsuits to go forward as a class action instead of requiring physicians to proceed individually. There is no set date as to when the 11th Circuit could rule.
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