Aetna settles suit over unfair business practices; dentists file similar action.

Aetna has settled a lawsuit brought by doctors who claim that major insurers interfered with the physician-patient relationship and conspired to reduce or delay payments under managed care contracts. As part of the settlement, the nation's third largest health insurer agreed to significant changes in its business practices. The agreement was reached the same week that dentists filed a similar suit against six major health insurers.

Both class actions were filed in federal court in Miami. Judge Federico Moreno, who certified the physicians' class in September 2002, has given his preliminary approval of the Aetna settlement. The judge has also ordered mediation talks between the physicians' lawyers and the remaining defendants, including Cigna, Humana, Prudential, and United Healthcare.

The suit alleges that the insurance companies reduced payments by using software to bundle and change the codes for procedures and that they delayed payments to doctors. (In re Managed Care Litig., No. 00-1334-MD-MORENO (S.D. Fla. consolidated Oct. 23, 2000); Physician Suits Against HMOs Target Unfair Business Practices, TRIAL, Sept. 2002, at 16; Doctors' Suit Against HMOs Certified as Class Action, Patients' Class Denied, TRIAL, Dec. 2002, at 62.)

Archie Lamb of Birmingham, Alabama, co-lead counsel in the physicians' suit, called the settlement "as good as one could possibly have obtained under the circumstances." In addition to $100 million in compensatory damages--approximately $140 for each of the 700,000 doctors represented in the suit--Aetna will also pay $20 million to establish a foundation to assist physicians with patient-related causes, such as caring for the uninsured.

The company also agreed to establish a faster and more efficient claims process and clearer coding guidelines.

In a press release, Donald Palmisano, president of the American Medical Association, called the settlement of the class action a "significant step": "By agreeing to the settlement, Aetna acknowledges that to mend the breach in its working relationship with physicians, it must implement a fundamental shift in how the company conducts business."

Most notably, Lamb said, Aetna has agreed to binding independent review of its coverage decisions. The new criteria place greater emphasis on frontline clinicians' diagnoses and shift the burden of proof to the insurer in disputes over treatment. "I'm satisfied because they've agreed to be bound by the external reviewers," said Lamb. "If they don't, the plaintiffs can go back to the judge to enforce the settlement."

The American Dental Association and two member dentists have filed a similar suit against Cigna Corp.; Cigna Dental Health, Inc.; Connecticut General Life Insurance Co.; MetLife, Inc.; Metropolitan Life Insurance Co.; and Mutual of Omaha Insurance Co. (Am. Dental Ass'n v. Cigna Corp., No. 03-21266 (S.D. Fla. filed May 19, 2003).)

The proposed class action claims that the defendants used cost-based criteria to deny claims, relied on code-bundling software to reduce payments, and intentionally delayed payments for covered services.