Psychiatric News October 3, 2003
Volume 38 Number 19
© 2003 American Psychiatric Association
p. 1
Cigna Joins Aetna in Settling Class-Action Suit
Kate Mulligan
Two insurance companies have reached settlement agreements about managed care litigation charging violations of the RICO Act. Six defendants remain.
Cigna Corporation has followed Aetna Inc. in reaching a settlement agreement in a class-action suit brought on behalf of more than 700,000 physicians. The physicians' class consists of all medical doctors who provided services to any person insured by any defendant from August 4, 1990, to September 30, 2002.
The lawsuit, In re: Humana Inc. Managed Care Litigation, charged health plans with violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act (Psychiatric News, May 3, 2002; October 18, 2002).
The suit, which was filed by 15 state medical associations, alleged that the companies "covertly manipulate, maneuver, and exploit longstanding 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 the physicians who provide medical services, . . [and companies] systematically deny and delay payments due physicians and profit from the moneys wrongfully retained."
On September 4 in the U.S. District Court in the Southern District of Florida, Miami Division, Judge Federico Moreno gave preliminary approval to a settlement between Cigna and the physicians in the same lawsuit.
A final hearing for approval of the settlement has been scheduled for December 18.
The estimated cash value of the settlement is $540 million, which includes cash payments for disputed claims, attorneys’ fees, and Cigna’s investment in changing some of its bill-paying practices, according to the September 3 Wall Street Journal.
Under the agreement, physicians can resubmit previously disputed claims for reimbursement. Cigna will pay $20 million into each of two funds to cover additional charges. Cigna will pay $15 million to a charitable foundation of the doctors’ choice and about $55 million in legal fees to the plaintiffs’ attorneys.
The company has agreed to establish an independent billing-dispute panel and to change its reimbursement system in a way that doctors expect will result in fewer reductions to payments and to less red tape.
The CEO of the California Medical Association (CMA), Jack Lewin, M.D., said, "With these settlements, CIGNA and Aetna are sending a clear signal that they are willing to structure their business practices in a way that benefits both doctors and their patients."
The CMA, one of the 15 state medical associations that had brought the suit, announced settlement with Aetna on May 22.
According to the CMA, Aetna agreed to "redefine medical necessity so physicians can expeditiously get their patients the care they require; assure fair and transparent billing, contracting, and administrative practices to end hassles physicians currently face; and create an external dispute resolution process overseen by the federal court system."
The agreement called for Aetna to pay $100 million to the doctors represented in the lawsuit. Each plaintiff doctor will receive something less than $200. Aetna will donate another $200 million to set up a foundation that will address problems in the health care system, such as improving chronic disease outcomes.
APA provided information to attorneys representing the plaintiffs in the litigation regarding managed care abuses affecting patients with psychiatric disorders and how those abuses could best be mitigated.
United Healthcare, Coventry, Wellpoint, Humana Health Plans, Pacifica Health Systems, and Anthem Blue Cross were part of the original suit and have not yet reached settlement agreements. 
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