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Managed Care Legal Battle Loses Steam

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U.S. District Judge Federico Moreno has cast aside most of the last claims remaining from a cloud of litigation that once appeared to threaten the survival of the U.S. private managed care industry.

The judge, who serves in the U.S. District Court in Miami, has issued a summary judgment order dismissing all claims still in play against UnitedHealth Group Inc., Minnetonka, Minn., and Coventry Health Care Inc., Bethesda, Md.

“After reviewing thousands of documents, there simply is insufficient evidence of the wrongdoing claimed–i.e., agreeing with their competitors to defraud the doctors,” Moreno writes in an explanation of his decision to dismiss the remaining charges.

“The court is not giving its imprimatur to the defendants’ actions or to the tremendous amount of compensation received by their executives,” the judge writes. “But any reform related to executive compensation or individual practices by the health maintenance organizations is beyond the power of this court. Those desiring changes in the way health care is provided in America must either look for remedies before Congress or allow the free market to dictate the results.”

At press time, it was not known whether lawyers for the plaintiffs could or would try to revive the claims.

If the summary judgment stands, it will end litigation in the case Charles B. Shane, M.D., et al. vs. Humana Inc. et al., which is part of in In re Managed Care Litigation, Case Number 1334.

Some claims in another In re Managed Care Litigation case, Kenneth A. Thomas, M.D., et al. vs. Blue Cross and Blue Shield Association et al., are still in court.

A group of lawyers began filing waves of purported class-action suits on behalf of patients and health care providers against managed care companies in the late 1990s, and, in 1999, the courts consolidated much of the litigation in Miami under Moreno’s jurisdiction.

At one point, the litigation seemed to be such a grave threat that the stock market was giving the managed care operations at Aetna Inc., Hartford, what appeared to be a “market capitalization” value, or market value, of negative $1 billion.

The managed care litigation suits filed on behalf of patients were dismissed on the grounds that the patients lacked enough common standing to form a class.

The litigation filed on behalf of health care providers against the managed care companies continued. The plaintiffs argued that the managed care companies had conspired against providers to hold down prices.

Managed care company defendants other than UnitedHealth, Coventry and the Blue Cross association already have resolved their cases through settlements. Those companies have agreed to make more than $600 million in payments to the providers, the providers’ lawyers and other parties; to change their claim-handling practices; and to do a better job of communicating with providers about contracts, fee schedules and claims.

UnitedHealth Chairman Dr. William McGuire and Coventry issued statements welcoming the Moreno ruling.

“We are pleased with today’s decision,” McGuire says in the UnitedHealth statement. “Looking ahead, UnitedHealth Group will continue to focus on our overarching goal: working constructively with physicians and other partners to provide all Americans with greater access to affordable, quality health care.”

Coventry “is pleased with this outcome and remains committed to operational excellence, including mutually beneficial relationships with physicians and other providers,” Coventry says in its statement.

Archie Lamb, a Birmingham, Ala., lawyer who has been the co-lead counsel for the physicians, notes that the end of the consolidated litigation could increase the threat UnitedHealth and Coventry will face from suits filed on behalf of individual physicians and small physician groups.

Settling the consolidated litigation could have protected the managed care companies against suits by all physicians who failed to opt out of the settlement, according to the rules governing typical class-action settlements.