ASHP and ASHN Prevail in CCA Litigation.

SAN DIEGO -- On Thursday, October 20, 2005, the San Diego Superior Court ruled in favor of American Specialty Health Plans of California, Inc. (ASHP) and American Specialty Health Networks, Inc. (ASHN) granting judgment on all claims filed against them by the California Chiropractic Association (CCA) in 2001. CCA's complaint originally included 18 causes of action and challenged essentially every feature of ASHP's and ASHN's managed care practices, contending that such activities were unfair, unlawful and fraudulent. CCA sought millions of dollars in restitution and injunctions that would have shut down many aspects of ASHP's and ASHN's business. McDermott Will & Emery served as counsel for ASHP and ASHN.

"We could not be more pleased with this outcome. We have been thoroughly vindicated on every substantive claim CCA filed against us," remarked George DeVries, President and Chief Executive Officer of both ASHP and ASHN. "We have always known that we're running a first-rate organization, that we fairly compensate our chiropractors and that we offer state-of-the-art clinical review services, where utilization decisions are made by licensed peers relying on the best available medical evidence and their experienced clinical judgment."

In a prior ruling leading up to the complete victory, the court noted that CCA failed to produce any evidence that the utilization management practices were "contrary to generally accepted professional/medical standards" or "arbitrary." With respect to chiropractor reimbursement, the court determined that there was no reason that it should interfere with ASHP's or ASHN's provider reimbursement schedules, denying both injunctive and monetary relief on these claims, based on the Department of Managed Health Care's finding that ASHP's chiropractor reimbursement rates were "reasonable in relation to industry practices." The court made a similar ruling on CCA's claim that ASHP had improperly administered a now discontinued contractual withhold. The court also held that CCA failed to present any evidence that ASHP or ASHN had terminated any chiropractors without cause in the past seven years and thus that there was no basis for CCA to prevail on its claim that defendants' chiropractor termination practices were unfair, unlawful or fraudulent. Finally, the court found that CCA's claim challenging ASHP's and ASHN's prior decision to limit acceptance in the network to a specified number of chiropractors within a particular area could not be sustained on any grounds.

"We are very pleased to have successfully put this matter behind us," added Bob White, the companies' Chief Operations Officer. "We are committed to meeting the needs of our health plan and other clients, while treating our chiropractors fairly and making available to patients quality care at an affordable price."

"Our victory in this matter is quite significant for the entire managed care industry. CCA attempted to establish that basic managed care practices were illegal under California law. We demonstrated that this is not so. CCA sought to have the trial court rewrite fair provider agreements, which the court refused to do," said lead attorney Elizabeth Mann. "If this approach had been successful, no managed care organization could safely rely on its contracts to guide its business decisions. Although it has been a long fight, we are not surprised to see ASHP and ASHN fully vindicated in this matter."

American Specialty Health, based in San Diego, and its affiliates is the nation's largest organization for complementary health care benefit programs, health education programs, and health-related products measured in terms of annual revenues, members/insured, employees, contracted providers and contracted health plans. Its affiliate, ASHP is California's first and largest specialized health plan for chiropractic and acupuncture benefit programs. ASHP provides chiropractic and acupuncture benefit programs to full-service health plans and employer groups. ASHP covers over four million members/insureds, and is California's third-largest specialty health plan. American Specialty Health administers benefit programs for 12.2 million members and discount programs for over 75 million members.

McDermott Will & Emery is a premier international law firm with a diversified business practice. Numbering more than 1000 lawyers, McDermott has offices in Boston, Brussels, Chicago, Dusseldorf, London, Los Angeles, Miami, Munich, New York, Orange County, Rome, San Diego, Silicon Valley and Washington, D.C. ASHP and ASHN were represented by Elizabeth Mann, Michael O'Neill and Jeff Goldberg.