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Judge Approves $255 Million Settlement In Health Net Case

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A U.S. District Court judge in Newark, N.J. has approved a settlement valued at $255 million in 3 class action suits against a managed care firm.

The suits against Health Net Inc., Woodland Hills, N.J., and several regional subsidiaries involved more than 2 million people in several states.

The suits alleged that Health Net used a flawed database produced by Ingenix, a subsidiary of United Health Group, Minnetonka, Minn., to reimburse its members improperly for insurance claims for out-of-network medical treatment. The class period extends back to 1997.

The suit charged the company with violations of the Employee Retirement Income Security Act, New Jersey’s employer health plan law, and the U.S. Racketeer Influenced and Corrupt Organizations Act by systematically underpaying its insurance plan members.

Health Net did not admit liability in the settlement, which was approved by Judge Faith S. Hochberg.

Under the terms of the settlement, Health Net will pay $215 million to more than 2 million participants in its health insurance plans in addition to making business practice changes, estimated to cost $40 million.

The cases in the settlement are Wachtel v. Health Net, McCoy v. Health Net and Scharfman v. Health Net.


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