Year 2000
 

Tuesday June 27 6:57 PM ET
National Health Insurers Face Federal Lawsuits

By Karen Pallarito

NEW YORK (Reuters Health) - Some of the nation's largest managed care companies are the target of a new round of federal lawsuits for their alleged failure to disclose financial incentives to deny or limit medical care services.

On June 22, Kaiser Permanente was named a defendant in a class action lawsuit accusing the Oakland, California-based health insurer of breaching its duty to fully disclose how it makes treatment decisions. The suit, filed in federal court in Tacoma, Washington, charges the health plan with violating the Employee Retirement Income Security Act (ERISA), the federal law governing health benefit plans.

Separately, another batch of lawsuits accusing six large health insurers with misleading plan members was filed in federal court in Miami on Friday, the New York Times reported.

According to the Times, the suits accuse Aetna Inc., Cigna Corp., Foundation Health Systems, PacifiCare Health Systems, Prudential Health Care and United Healthcare of failing to disclose that they offered rewards to doctors and other employees who denied payments for care and who limit hospital admissions. The suits also contend that the insurers defrauded members in violation of the federal anti-racketeering law, the Times reported.

Stephen Neuwirth, an attorney with Boies & Schiller who is involved in bringing suit against the HMOs, was not available for comment at deadline, but his office confirmed that the suits had been filed.

The nation's largest health insurers have been attacked repeatedly in spate of class action lawsuits alleging that they failed to disclose financial disincentives to provide treatment.

Humana Inc. was the target of the first class action lawsuit, filed last October. The multimillion-dollar suit against the Louisville, Kentucky-based insurer alleged that the company failed to disclose the conditions of its health coverage and that it paid physicians to deny coverage. The suit was filed in the Miami division of the US District Court. Neuwirth also represents some of the plaintiffs in the Humana case.

A total of 11 suits has been filed against Humana and have been consolidated at the company's request, the New York Times reported. Humana has until July 7 to submit its dismissal motion and a hearing has been set for August 17, it said. If the case proceeds, plaintiffs must file their arguments for class action status by August 15 and Humana must respond by September 14, the paper reported.

A Humana lawyer was quoted saying that the suits lacked merit and should be dismissed.

Insurance industry officials have maintained all along that the lawsuits are baseless and will only serve to drive up the cost of healthcare. At deadline, a Kaiser spokeswoman did not return a call for comment.

But Lynn Sarko, the attorney representing former Kaiser member Richard J. Peterson in the class action filed last week, told Reuters Health that Kaiser clearly failed to carry out its duty to disclose all material facts to its members. ``Kaiser is advertising the Cadillac medical plan and in essence I'm getting a Yugo,'' he charged.

Sarko said he hoped the suit would serve as another ``nail in the coffin of the methods and means that HMOs are using to misinform and mistreat their subscribers.''