Update: UnitedHealth to Buy PacifiCare - 07/07/05

Cypress-based PacifiCare Health Systems Inc. said Wednesday it has agreed to acquired by rival UnitedHealth Group Inc. for a total consideration of $2.2 billion in cash and 111.6 million shares.

PacifiCare shareholders will receive $21.50 in cash and 1.10 UnitedHealth shares for each share held.

PacifiCare's stock market capitalization at Tuesday's closing price was $6.3 billion.

Upon completion, PacifiCare will operate as a wholly owned subsidiary of UnitedHealthcare. The deal remains subject to approval by PacifiCare shareholders and regulators as well as other customary closing conditions.

PacifiCare saw its shares surge nearly 13.2 percent to $82.25 in midday trading Wednesday after word broke that United is closing in on a deal to buy the operator of managed healthcare plans. Trading in PacifiCare, and Minnetonka, Minn.-based United, also a managed healthcare service plan operator, was halted at 12:13 p.m. EDT on the news.  Full Story...

$4.2 Million Humana Verdict May Have Broad Implications for Managed Care Industry - 07/07/05

SAN ANTONIO July 06 (BestWire) — In a case with potentially broad implications for the managed-care industry, a San Antonio jury has levied a $4.2 million damages verdict against Humana Inc.'s Texas HMO subsidiary, finding the HMO partially liable for negligently mismanaging a member's medical care.

The family of Joan Smelik, including her husband and two grown children, originally filed the wrongful death suit in May 2003, alleging Humana Health Plan of Texas Inc. mismanaged Smelik's health care before her 2001 death from kidney failure by failing to implement case management procedures set forth in Humana's member handbook, said Jon Powell, an attorney who represented the Smeliks, based in San Antonio.

In the 10-2 verdict, handed down July 1 in the 224th District Court in Bexar County, the jury found the Smelik family suffered a total of $9 million in damages due to the mismanagement.

In addition to Humana of Texas, a unit of Humana Inc. (NYSE:HUM), the defendants also included a physician and a physician group, said Rene McElhaney, of the San Antonio-based Cox Smith Matthews Inc., another attorney who represented the Smelik family.

Joan Smelik received her health insurance coverage from Humana through her husband's employer, a health plan governed by the Employee Retirement Income Act of 1974, or ERISA, said McElhaney.

With the jury verdict, delivered after three days of deliberations, Humana was found 35% liable, McElhaney said. Total damages levied against the HMO were $4.2 million, which included $2.6 million in compensatory damages and $1.6 million in punitive damages, she said.  Full Story...