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Three state medical groups complain of 'conspiracy' among managed care organizations, a charge the industry rejects.
Thousands of doctors have banded together to launch a legal attack on some of the nation's largest health insurers, accusing the plans of systematically cheating them out of fairly earned payments.
The federal lawsuit, filed last month in Florida, is an amended version of a lawsuit initiated a year ago by the California Medical Association, and it also consolidates lawsuits filed earlier by 20 individual physicians in seven states. The Texas and Georgia medical associations also have joined in the legal action.
The complaint describes a "conspiracy" among managed care organizations, including Aetna, Cigna and Humana, to "deny, delay and diminish payments" to health care providers. It accuses the plans of using widespread practices to limit physician payments and thus increase their profits, such as changing the codes in patient claims to reflect less expensive treatments, refusing to pay because of "arbitrary" standards published by outside consultants, and purposely tying up claims with red tape while they earn interest on the funds.
The lawsuit was filed as a class-action complaint, and it invokes the Racketeer Influenced and Corrupt Organizations (RICO) Act, commonly used to fight organized crime. Last December, Judge Federico A. Moreno dismissed assertions by the CMA that the health plans had violated RICO on the basis that they were not acting as an "enterprise," as that law requires. However, he left the door open for an amended complaint that was filed on March 26, and the new version gives an extensive description of a "managed care enterprise" encompassing not only the plans being sued but a number of other related companies as well.
A separate lawsuit was filed last month in Connecticut state court by the Connecticut State Medical Society against six managed care companies operating there. Many of the practices described in that suit are similar to those alleged in the federal class action suit.
Health plans being sued declined to comment on the pending litigation, except to issue terse statements denying the accusations. Behind the scenes, industry insiders portray the lawsuits as an outlet for frustrated physicians to lash out at managed care and its impact on their incomes.
Physician groups, however, insist they are not taking on managed care itself but rather the abuse of certain practices.
"We believe that managed care can operate without engaging in gangster-style tactics," said Peter Warren, director of media and public relations for the CMA.
The federal lawsuit cites numerous examples of specific patient claims that were paid many months after being submitted. In some cases, payments were delayed because more information was requested. In other cases, payments were delayed or denied due to disagreements over prior authorizations from the insurer. The complaint describes these practices as representing a pattern of conduct aimed at defrauding physicians out of their rightful payments.
"They are cheating at their claims practices, at the very least," said Archie Lamb, a Birmingham attorney representing the doctors. Health plans have characterized these complaints as anecdotal, he said, but the involvement of three physician groups representing 75,000 doctors demonstrates that these practices are widespread.
State medical associations across the country have been trying to work with health plans to iron out these problems, said Jim Rohack, MD, president of the Texas Medical Association (TMA). "As physicians, we know that the court system takes forever to get something done," he said. "We only come to this kicking and screaming."
In fact, the TMA has worked with state legislators and regulators to define a "clean claim" that could not be subjected to delays and disagreements by insurers. However, the state does not have authority over health plans that are self-funded by large employers, due to federal protections extended by the Employee Retirement Income Security Act (ERISA), he said, which involve a significant portion of the state's patient population.
Different states also have had different experiences with individual health plans. For instance, the Medical Association of Georgia names insurer Aetna in the current lawsuit, whereas the California group has ongoing negotiations with that plan, and did not include it in their portion of the complaint.
"We're still working with them (Aetna) to fix problems," said CMA spokesman Warren.
Plans being sued by the CMA are Health Net, PacifiCare Health Systems and Wellpoint Health Networks. The Georgia group has targeted Aetna, Cigna, Coventry Health Care, Prudential and United Health Care. The Texas group names Cigna and Humana, and the Denton County Medical Society in Texas also is participating in the lawsuit, naming Aetna, Cigna, United, Humana and Prudential.
The lawsuit "represents frustration with these plans," said the CMA's Warren, "and an inability to bring them to the table to resolve issues."
Other state physician groups, meanwhile, have more open channels of communication with health plans. "It's a different medical practice environment from state to state," said Tom Curry, executive director of the Washington State Medical Association. Physicians there have been reluctant to engage in a protracted legal battle with insurers, although many have the same complaints against them, he said.
"We are giving them one last effort to see if there are things that we can do to resolve some of the nightmares that physicians and hospitals face here," he said. Other states apparently feel they already have exhausted all other efforts, he added.
Whether or not the legal route will be successful, however, is another big question on the minds of everyone involved.
"Hope springs eternal," mused Texas medical leader Dr. Rohack. When the California physician group initiated the legal action over a year ago, many observers dismissed it as "typical" for a state considered the bastion of managed care, he said. "Now, you've got two other associations saying it's a systematic problem everywhere."
The physician groups believe federal oversight will be necessary to ensure that health plans follow through on any ordered changes resulting from the lawsuit. In the past, they say, health plans have agreed to changes that were never implemented. "They promise one thing, but then in practice it never happens," Dr Rohack said.
The legal battle itself is still in just the formative stages, said attorney Lamb. The next hurdle is a hearing scheduled in May to determine whether the lawsuit can proceed as a class action, joining the efforts of the individual physicians and the various medical associations. Lawyers for the health plans have asked the judge to dismiss the lawsuit entirely. The judge's rulings will determine what shape this legal battle will take, Lamb said, calling it too early to speculate about an outcome.
"If nothing else," he said, "this will expose just how bad this conduct is."
Knowing that a legal remedy would take a long time, however, the physician groups admit they would prefer a settlement in which insurers would agree to acceptable payment practices.
But getting health plans to settle may require broad public support, suggested M. Gregg Bloche, MD, professor of law at Georgetown University. Admitting he is skeptical about the lawsuit's chances in court, he also questioned whether the physician groups would receive much encouragement from patients.
"It sounds like this is about physicians' economic interests versus health plans' economic interests," he said. Other legitimate issues not addressed in the lawsuit, for example, include financial incentives for doctors to withhold treatment, he said.
"Where is the voice of doctors with respect to those issues?" he asked. "Something's missing here."
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