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Cigna Reaches $540 Million Agreement to Settle Doctors' Suit

Cigna Corp. will pay about $540 million to settle a lawsuit claiming it routinely shortchanged the nation's doctors on payments for their services. The nation's third-largest health insurer also committed to spending $400 million to change its claims processing procedures, sources said. The agreement, subject to preliminary approval today at federal court in Miami, comes without the endorsement of an Illinois physician who led the lawsuit against Cigna.

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Cigna Corp. will pay about $540 million to settle a lawsuit claiming it routinely shortchanged the nation’s doctors on payments for their services. Cigna’s cash payout is a guaranteed $140 million and an expected $170 million for reimbursement on claims up to 12 years old, attorney fees and a new health care foundation, sources close to the talks said Wednesday, speaking on condition of anonymity. The nation’s third-largest health insurer also committed to spending $400 million to change its claims processing procedures, sources said. Most of that money has been spent since lawsuits targeting the managed care industry were originally filed in 1999. In addition, doctors expect to save $300 million, largely by reducing their claims processing overhead. Cigna would drop its requirement for medical records to support claims except in unusual circumstances. The agreement, subject to preliminary approval today at federal court in Miami, comes without the endorsement of an Illinois physician doctor who led the lawsuit against Cigna. Dr. Timothy Kaiser complained in a letter to the judge Tuesday about settlement money going to medical societies and doctors’ lawyers and questioning parts of the agreement that he calls “unintelligible.” But Dr. Suzanne Corrigan, a Texas pediatrician and class representative, wrote the judge Wednesday to say she was “impressed with the final result” and was pleased with the compensation options offered to doctors. The agreement builds on an earlier $470 million settlement with Aetna and another Cigna package proposed last November, said Rocky Wilcox, general counsel of the Texas Medical Association. “We hope that and believe it will go a long way to repairing the harm that’s been done and will encourage Cigna to treat physicians fairly in the future,” Wilcox said. Philadelphia-based Cigna agreed to pay at least $70 million to 700,000 doctors nationally, $55 million in attorney fees and $15 million to launch the foundation. Doctors can choose one of two ways to seek money under the settlement, which works out to an average of $100 per physician. They can request reimbursement from a $40 million fund based on actual claims, or $30 million will be split among doctors who pick an alternative not tied to claims. The second option would be attractive to retired physicians who no longer maintain their records. The company took a $50 million charge in the fourth quarter of last year based on its original settlement agreement. The new one will cost more, but the amount has not been disclosed. Cigna did not immediately return calls seeking comment. Kent Jarrell, spokesman for other major insurers who have not settled, said the agreement “is no surprise.” He said the remaining defendants “continue to be committed to vigorously fighting the lawsuit.” The remaining defendants — Anthem, Coventry, Foundation, Humana, PacifiCare, Prudential, United and Wellpoint — are pinning their hopes on an appeal to be argued next week challenging the class-action status unifying the nation’s doctors in lawsuits against leaders of the managed care industry. Cigna shares rose $1.52 to close at $49.01 on the New York Stock Exchange. Copyright 2003 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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