Settled cases may soon outnumber unresolved cases in the long litigation over health insurers’ use of an industry database that set “usual, customary, and reasonable” (UCR) rates for medical procedures. On Friday, Aetna Inc. agreed to a $120 million settlement of claims that its reliance on the database led to low reimbursements for procedures performed by out-of-network providers. The Aetna agreement joins previous UCR settlements by UnitedHealth Group Incorporated and Health Net Inc. UCR suits are still pending against Cigna Corporation and WellPoint Inc.
But the potential resolution of the Aetna case doesn’t necessarily mean that the Cigna and WellPoint suits will be wrapped up soon, said D. Brian Hufford of Pomerantz Grossman Hufford Dahlstrom & Gross. His firm, which was first retained by the American Medical Association for UCR litigation in 2001, served as chair of the plaintiffs’ executive committee in the Aetna litigation. “This settlement doesn’t mean that those cases will settle, or for how much, because those cases involve other issues about how [Cigna and WellPoint] process claims,” Hufford told us.
Attorneys for Aetna and for the patients and providers who sued the company filed the proposed settlement with U.S. district court judge Stanley Chesler in Newark, who has been overseeing much of the UCR litigation. The settlement covers claims by patients from March 2001 to the present, and by doctors from June 2003 to the present. Aetna will pay up to $60 million for simple claims, and up to another $60 million for claims filed with supporting documentation. The company has said that it will take a $78 million after-tax charge in the current quarter for the settlement.
“The plaintiffs were pleased that after a long and difficult litigation, we were able to achieve a highly favorable settlement that provides real and immediate relief,” James Cecchi of Carella, Byrne, Cecchi, Olstein, Brody & Agnello told us. Cecchi was selected as lead settlement liaison for the plaintiffs in 2009 by Judge Faith Hochberg, who presided over the UCR cases in the District of New Jersey before Chesler took them on. The plaintiffs’ legal team also included Whatley Kallas, Seeger Weiss, and Scott + Scott.
While legal fees will come out of the funds that Aetna has set aside for the settlement, the plaintiffs’ attorneys said that it was too soon to speculate on what the fee request would be. “We have not had any discussions about that,” said Edith Kallas of WhatleyKallas, whose firm represents around 20 state medical associations in the UCR litigation. But, Kallas adds, “there’s been a tremendous amount of work done—all of the discovery was done.”
Aetna’s plan members and out-of-network providers will both be able to seek recovery by filing a claim form, either with or without supporting documentation. Claimaints who file the form by itself can recover up to $40 for each year that they are eligible. Claimants who file supporting documentation–the bills that a provider sent to a Aetna subscriber showing the subscriber’s balance for the procedure in question–will be eligible for up to 5 percent of the allowed amount for the procedure. Read the memorandum of law in support of the settlement
, and the plaintiffs’ amended complaint
Richard Doren, a partner in the Los Angeles office of Gibson, Dunn & Crutcher who specializes in healthcare litigation, was lead counsel to Aetna. Doren passed along our request for comment to Aetna spokesperson Cynthia Michener, who gave us a statement that said in part: “There is no admission of wrongdoing. Aetna is pleased to resolve this longstanding litigation with members and providers, both of whom are important constituents.”
The UCR litigation started in 2000, when the American Medical Association and state medical assocations filed a class action suit against UnitedHealth, which ran the Ingenix database that set UCR rates for medical procedures for the entire health insurance industry. Insurers used the Ingenix rates to determine how much they would reimburse for procedures performed by providers not in their network. The AMA and its co-plaintiffs maintained that Ingenix set rates too low, resulting in lower reimbursements by insurers to out-of-network providers, which in turn meant that subscribers had to make higher payments to their providers. (The AMA has kept track of the Ingenix litigation at this online
Andrew Cuomo, then the attorney general of New York, got involved in the Ingenix controversy in 2007 when his office filed suit against UnitedHealth and the insurers that used Ingenix. According to an investigation by the AG’s office, Ingenix data understated the true market rates of medical care by up to 28 percent. The insurers reached a settlement with Cuomo in 2009 in which they agreed to stop using Ingenix and turn over the task of setting UCR rates to a new database, called
, to be run by academic institutions instead of the industry. (Read The New York Times story on the settlement
In addition to attacking Ingenix, the AMA and the other provider and patient plaintiffs also sued the insurers that relied on the database. Health Net was the first insurer to settle, in 2008, for
. UnitedHealth settled next, in 2009, for $350 million. After legal fees and administrative costs, $250 million was distributed, primarily to providers, Hufford told us.
But the UCR plaintiffs suffered a setback in 2011 when Judge Chesler dismissed the providers’ claims against Cigna, finding that they did not have adequate assignment of benefits. That dismissal had an impact on the Aetna litigation that the judge was also hearing, Kallas told us. “[Chesler] hadn’t dismissed the provider claims in Aetna, but everyone assumed that if he ruled that way in Cigna, he would rule the same way in Aetna,” she said. Plaintiffs’ attorneys acknowledge that Chesler’s Cigna ruling does raise the question of how he will respond to the proposed Aetna settlement. “That factor was taken into account, but we think the judge will still approve this as being fair,” Hufford said.
Chesler is still considering the subscriber claims against Cigna. The provider plaintiffs filed
a new complaint
against Cigna in the Northern District of Georgia in January. According to Hufford, Cigna’s motion to dimiss that action has been fully briefed and is pending.
The UCR claims against WellPoint were filed in the Central District of California, where they’re been heard by Judge Philip Gutierrez. In a September ruling,
he upheld most of the plaintiffs’ ERISA claims and dismissed the antitrust and RICO claims against WellPoint. Hufford said that the plaintiffs have since filed an amended complaint.