Signatory medical societies prosecuting the national class-action lawsuit against HealthNet have reached a settlement agreement. This is the third of six national class- actions against major healthcare insurers to reach settlement. The agreement must be approved by the U.S. Federal District Court in Florida. The hearing is set for September 19, 2005. If approved, the settlement agreement will cover approximately 900,000 physicians. Class members who wish to opt-out of the settlement agreement must do so by August 22, 2005.

U.S. District Judge Federico Moreno on Monday approved $167 million in settlements reached by Health Net and Prudential Financial Services in a class-action lawsuit filed on behalf about 950,000 physicians.

In the lawsuit, physicians allege that Anthem Blue Cross and Blue Shield, Coventry Health Care, Health Net, Humana Health Plan, PacifiCare Health Systems, United Healthcare and WellPoint Health Networks delayed or denied reimbursements for medical services and illegally rejected claims for necessary services as part of a racketeering conspiracy.

Aetna and Cigna, which also were named as defendants in the lawsuit, have settled with the physicians for a combined $1.01 billion. Aetna purchased Prudential in 1999 (California Healthline, 5/4). WellPoint and Anthem, which merged late last year, also have reached tentative settlements in the lawsuit.

Terms of Settlements

Under the settlements, Health Net will pay $40 million to active and retired physicians, as well as $20 million in legal fees for the physicians. In addition, Health Net will pay an estimated $80 million to improve the system that the company uses to process reimbursement claims.

Prudential will pay $22.2 million to improve managed care, as well as $5 million in legal fees for the physicians. Prudential also will monitor payment of other settlements in the lawsuit.

Harley Tropin, lead attorney for the physicians, said, “These latest settlements are significant in the changes that will be made in the treatment and payment to doctors similar to those agreed to by Cigna and Aetna.” According to Tropin, attorneys for the physicians have entered negotiations with the four defendants that remain — Coventry, Humana, PacifiCare and UnitedHealth — with the lawsuit scheduled to proceed to trial in January 2006.

A class action lawsuit was filed on behalf of thousands of evacuees from Hurricane Katrina.

Hurricane Katrina evacuees will ask a judge to order the Federal Emergency Management Agency to continue housing assistance for thousands of evacuees threatened with loss of benefits and potential homelessness.

A class action lawsuit, says FEMA’s response to hurricanes Katrina and Rita has been “wholly inept.” It echoes complaints by housing advocates, city officials and others that the agency has unlawfully disqualified thousands of evacuees from its housing programs and has provided confusing and contradictory information.

As a result, the lawsuit alleges, “tens of thousands of the most vulnerable Americans — among them the elderly, the disabled, children and the poor — are faced with the real threat, through no fault of their own, of becoming homeless.”

A class action lawsuit has been filed in Oklahoma against Farmers Insurance Companies Inc., for using credit information in insurance ratings.

According to court documents, the plaintiffs are suing “Farmers Insurance Company Inc., Farmers Group Inc., Farmers Insurance Exchange, Fire Underwriters Assoc., Fire Insurance Exchange and Mid-Century Insurance Company, seeking to recover statutory damages, costs and attorneys’ fees based upon defendants’ alleged willful violations of the Fair Credit Reporting Act” (FCRA).

The plaintiffs claim that Farmers companies’ use consumer report information on their applicants and insured’s and “took adverse action against each plaintiff and each class member, based in whole or in part on information obtained in consumer reports, but did not provide adequate notice of the adverse action to each plaintiff and each class member as required by the FCRA,” according to the judge’s published opinion. The plaintiffs further allege that the companies’ failure to provide adequate notice was “willful and deliberate.”

Class certification was sought for all who received, renewed and/or purchased personal auto and/or homeowners policies from the named companies and “were charged more than the lowest premium available for such insurance” based on credit history contained in the consumer report.

The judge rejected several of Farmers’ arguments against granting class action status, including the companies’ contention that oral notice of adverse action given by their appointed representatives was sufficient. Court documents showed that the defendants claimed “their independent insurance agents had a regular business practice of providing oral notice of adverse action to their customers. Defendants assert that the insurance agents routinely informed their customers that credit information was used in determining premiums and also informed their customers if they did not receive the best premium discount based in part on their credit information.”

The judge rejected the companies’ argument for various reasons, including the fact that “evidence before the court does not reveal that the named plaintiffs or the class members received oral notice of adverse action during the time period when defendants utilized the three adverse action notice forms” that are central to the class definition.

The court noted that its certification decision may be “altered or amended” at a later date “should circumstance warrant.”