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Federal Judge Throws Out Racketeering Claims Against 7 HMOs

March 03, 2001|KEITH SNIDER | BLOOMBERG NEWS

MIAMI — Aetna Inc., Cigna Corp., WellPoint Health Networks Inc. and four other health insurers won a partial victory Friday as a U.S. judge dismissed claims that the health maintenance organizations conspired against doctors.

U.S. District Judge Federico Moreno threw out physicians' claims that the health insurers violated federal racketeering laws and didn't pay doctors promptly as their contracts required. Moreno allowed the plaintiffs to amend some legal claims, though, and said breach-of-contract claims under state law may stand.

The decision, though expected by some lawyers watching the case, is a victory for health insurers.

The HMOs face more than 50 lawsuits by doctors and patients who say the insurers denied claims or paid them too slowly and didn't tell patients they offered doctors financial incentives to limit care. Moreno is expected to make a ruling on the patient lawsuits next month.

"Today's ruling is good news in that it rejects the plaintiffs' claims regarding federal prompt payment issues and points out deficiencies in many other key areas," No. 3 health insurer Cigna said in a statement.

Aetna, which is trying to settle the patient lawsuits, called the mixed ruling on the doctor suits "very encouraging."

"We do not believe that the courts are the place to resolve the complex issues that we face in working together with physicians, and we do not believe that we can sue our way to better health care in America," the American Assn. of Health Plans, the main HMO trade group, said in a statement.

Meanwhile, an attorney said the plaintiffs are confident they can make the racketeering claim stick.

The lawsuits, which were consolidated in Florida, claimed HMOs systematically delay and deny payment to health-care providers even when care is medically necessary. The practices violate federal racketeering laws and a 1974 federal law that regulates pension and health benefits, the lawsuits said.

The lawsuits named Aetna, Cigna, WellPoint, Humana Inc., UnitedHealth Group Inc., Health Net Inc. and PacifiCare Health Systems Inc.

Moreno did allow an allegation to stand that Humana broke its contract with providers by paying them too little for medical services. Moreno said plaintiffs may add other health insurers under that claim. Plaintiffs have said other insurers were omitted through a clerical error, the judge said.

On the New York Stock Exchange, Aetna shares rose 36 cents to close at $37.45, WellPoint rose $3.20 to $103.19, UnitedHealth rose $1.80 to $60.79, and Cigna rose $2.47 to $112.42. PacifiCare rose $1.47 to close at $32.38 on Nasdaq.

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