Both sides claim partial victory in consumer lawsuit against HMOs
In 2002, a federal judge dismissed a portion of claims in a lawsuit against some of the nation's largest HMOs but has also ruled that the remaining claims can proceed.
United States District Judge Federico Moreno found that six of 16 charges of fraud under the Racketeer Influenced and Corrupt Organization (RICO) act against Aetna, CIGNA, and UnitedHealthcare have demonstrated proper standing and can proceed. Ten other claims, including those against Foundation Health, PacifiCare, and Prudential, were dismissed because federal lawsuits are prohibited from encroaching on state regulatory decisions. Laws regulating the insurance industry in California, Florida, New Jersey, and Virginia do not provide for civil remedies.
|Judge Federico Moreno has provided plaintiffs with every opportunity to replead dismissed charges.|
Moreno had given the consumers' lawyers an extension to bolster their cases and refile charges against the HMOs. The consumers allege that the insurers approve or deny patient care based on, in Moreno's words, "whatever will not unnecessarily lower the HMOs' profits when delivering medical care."
In June 2001, Moreno did not dismiss racketeering charges against Humana, saying that the consumers in that lawsuit have established valid claims.
Moreno in his most recent action did dismiss Employee Retirement Income Security Act (ERISA) claims that stated HMOs had misrepresented the definition of "medical necessity." He noted that plan participants had not yet exhausted their options for resolving medical necessity issues through insurance company channels.
Moreno said consumers who are no longer participants in the HMOs do have valid misrepresentation claims but they must be rewritten to meet the court's requirements on information that ERISA commands the insurers as fiduciaries to reveal.
The judge did allow the remaining ERISA claim of breach of fiduciary duty to proceed. HMOs are accused of interfering with doctor-patient relationships by imposing "gag" orders on doctors.
Lawyers for the HMOs see Moreno's latest decision as a substantial narrowing of the case that could make it more difficult for the plaintiffs to prove there was any harm to consumers.
Plaintiff lawyers see it as a chance to move forward with the core claim of lack of disclosure by HMOs on cost-suppression practices that result in harm to consumers.
Moreno has provided plaintiffs with every opportunity to replead dismissed charges with amended language in order to meet court standards of proof. Insurers continue to insist the case is without merit.
The next big step, according to both sides, will be the judge's decision on whether or not to grant the case nationwide class action status.