NU Online News Service, Feb. 20, 6:06 p.m. – A federal judge in Miami has issued a ruling that lets consumers proceed with a bundle of lawsuits against six large managed care companies.
U.S. District Judge Federico Moreno today threw out many of the allegations in the lawsuits, but he allowed the plaintiffs to proceed with three types of claims dealing with the Employee Retirement Income Security Act, state insurance laws and the federal Racketeer Influenced And Corrupt Organizations Act.
- All remaining plaintiffs can proceed with claims alleging that “gag rules,” or other rules that interfere with efforts by members of employer-sponsored health plans to communicate with physicians, might violate ERISA by breaching the plans’ duty to act solely in the interest of plan participants.
- Plaintiffs who live in states that recognize a private cause of action for insurance fraud can proceed with RICO claims.
- Former plan members can proceed with claims alleging that plans have breached their fiduciary duty to plan members by using the term “medical necessity” in a way that conflicts with the definition stated in membership materials.
- The judge says current plan members have done a poor job of stating the claim that misuse of the term “medical necessity” is a breach of fiduciary responsibility, but he is giving them until March 20 to file amended complaints that do what he believes to be a better job of stating medical necessity claims.
The ruling deals only with procedural issues, and not with the merits of the plaintiffs’ allegations.
The court has posted the ruling on its Web site, at the bottom of its “Notable Cases” page, at http://www.flsd.uscourts.gov/default.asp?file=cases/index.html
The suits now being heard in Miami are part of a wave of suits filed around the United States starting in late 1999. A panel of federal judges transferred some of the cases to the Miami district court, which was already handling a similar case of its own, in October 2000.
The lawyers who filed the suits are asking the court for permission to represent classes consisting of millions of managed care plan members, former members, and plan network physicians. The Miami court has split the member suits and the physician suits into two separate tracks.
ERISA, one of the laws involved, is a federal law that governs most private employer-sponsored health plans. ERISA sharply limits suits against employer-sponsored plans, but it also imposes a fiduciary duty on the plans to act solely in the interests of the plan participants and beneficiaries, Moreno writes in his ruling.
RICO is also a federal law. It permits plaintiffs who win lawsuits against organizations that they prove to be “enterprises” guilty of racketeering to collect total damages equal to three times the actual damages.