Article from the Indianapolis Star Online
WellPoint Inc. has agreed to pay $198 million to settle two
national lawsuits filed by physicians that alleged underpayment by the health
insurance giant.
The agreement, if approved in federal court in Florida, calls for the
Indianapolis health benefits company to pay $135 million into a settlement fund
for physicians, up to $58 million in legal fees and $5 million to a
not-for-profit foundation that promotes better health care.
Publicly traded WellPoint will take a $103 million, or 10-cent-a-share charge,
in the second quarter to reflect costs of the settlement.
"We see this agreement as a very important step in further collaborating with
physicians," WellPoint President Larry C. Glasscock said in a statement.
The deal would resolve two class-action lawsuits originally filed against Anthem
Inc. and WellPoint Health Networks, which merged last year to create WellPoint
Inc. One lawsuit was brought against the Blue Cross Blue Shield Association, of
which WellPoint is a member and licensee. Several other health benefit companies
also were sued by doctors, who began the protracted legal battle against health
plans 10 years ago. Earlier settlements were made with Aetna, Cigna, Prudential
and HealthNet.
Plaintiffs involved in the settlement were 18 state medical societies and
professional organizations representing 700,000 physicians.
WellPoint also agreed to "implement important changes to its business practices
(that) will result in significant savings to physicians in overhead costs and
time spent contesting claims," said a statement from the plaintiffs. Counting
the cost of those changes to WellPoint, the value of the settlement rises to
$250 million, the plaintiffs said.
"WellPoint obviously recognized that a costly trial of any of the disputed
issues with physicians would not be in the interest of the company," Archie
Lamb, co-lead counsel for the physicians, said in a statement.
Dr. Jack Lewin, chief executive of the California Medical Association, which was
part of the settlement, called it "a significant step forward for physicians and
their patients. We hope it puts leverage on the other health plan defendants to
move ahead and resolve this suit."