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Life Health > Health Insurance

American Medical Agrees To $9 Million Settlement

By Staff Writer

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NU Online News Service, March 12, 2004, 1:32 p.m. EST – American Medical Security Group Inc., Green Bay, Wis., may be about to put a class-action lawsuit behind it.[@@]

The health insurer says it has agreed to pay about $9 million to settle the suit, Gadson vs. American Medical.

Lawyers for the plaintiffs filed in the suit in 2001 in a state court in Montgomery County, Ala. If the court approves the agreement, the plaintiffs would end all current litigation against American Medical. The settlement also would block any future lawsuits by participating class members against American Medical in Alabama and Georgia.

There would be “no admission or implication of liability or wrongdoing” on the part of American Medical, American Medical says.

“Our rating methods in Alabama and Georgia were both lawful and appropriate,” American Medical Chairman Samuel Miller says in a statement about the settlement agreement. “However, the settlement agreement will allow us to put the distraction and expense of this litigation behind us and to focus on growing the company.”

The plaintiffs in the case filed the suit to attack a rating methodology that American Medical once used to price group health plans sold to individuals in Alabama and Georgia, the company says. American Medical emphasizes that it has not used the methodology since 1999 in Alabama and since 2002 in Georgia.

Insurance should cover part of the settlement payment, American Medical says.

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