Article from the South Florida Sun-Sentinal
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Miami federal judge will be asked today to give preliminary approval to a
settlement between Humana Inc. and representatives for 700,000 physicians who
claimed in a class-action lawsuit they were systematically cheated by many of
the country's large managed care companies.Humana has agreed to pay $40 million to the doctors and as much as $18 million in legal fees to 175 lawyers who worked on the lawsuit, which was filed six years ago. Other firms such as Cigna HealthCare and Aetna previously settled for significantly higher amounts because they have many more members nationally than Humana.
Medical consumers stand to benefit, physicians' co-lead counsel Archie Lamb said, because Humana and other HMOs that settled with the doctors have upgraded claims processing to allow some previously denied claims, speed processing, increase accuracy and create a more efficient appeals process.
"We have devoted significant time and resources to improving the quality and timeliness of our transactions with physicians who care for our health-care members," Humana's chief executive officer, Michael McCallister, said in a statement. Humana estimated it spent $75 million to implement the changes.
The company said it would record $45 million in after-tax expenses, or 27 cents a share, during the third quarter of 2005 as a result of the settlement and other related litigation costs. Humana shares closed Tuesday at $45.61, down 4 cents.
Lamb and his team, along with Humana lawyers, will present the accord this morning to U.S. District Judge Federico Moreno, who has approved the previous settlements.
When he approved a settlement between the doctors and Aetna about two years ago, the judge said, "If this case were to proceed without settlement, the resulting trial and the inevitable appeal would be complex, lengthy and very expensive." Lawyers for both sides expect he will express similar sentiments this time.
The Humana settlement, valued at about $103 million, is less than one-fourth of the value affixed to the Aetna agreement worth $470 million, and only about one-seventh the size of the Cigna agreement, worth more than $700 million.
Three companies remain in the lawsuit: United HealthCare, Coventry and PacifiCare. Trial could begin in April unless they reach settlements, Lamb said. A separate suit against many of the nation's Blue Cross and Blue Shield companies also is pending, he said.