FEDERAL JUDGE HALTS CIGNA'S SETTLEMENT WITH DOCTORS.

U.S. District Judge Federico Moreno blocked a settlement agreement between doctors and Cigna late Dec. 12, saying he could not "turn a blind eye to the underhanded maneuvers Cigna took" to obtain the agreement in a federal court in East St. Louis, IL (See Liability & Insurance Week, Dec. 9)

In granting the preliminary injunction sought by the doctors' lawyers, Moreno accused Cigna of attempting to avoid the jurisdiction of the Miami Division of the Southern District of Florida which was ordered by a multidistrict panel of federal judges to consolidate over a dozen cases filed by more than 600,000 doctors affiliated with health maintenance organizations against Cigna and six other health insurers.

Moreno told Cigna it would need his approval before proceeding with the settlement under consideration by U.S. District Judge Patrick Murphy of the court in Illinois. "Cigna snookered both this court and Judge Murphy in an obvious attempt to avoid this court's jurisdiction," he said.

He also ordered Cigna and "any party acting in concert with Cigna" to stop contacting the doctors.

Although Cigna spokesperson Wendell Potter said he had not yet seen the order, he said he did not believe the injunction would affect the terms of the agreement, which he called fair.

"What is at issue is which federal court will review and oversee the settlement. We remain prepared to demonstrate the fairness of the agreement to whichever federal judge is given the responsibility."

The agreement, posted on Cigna's website, would settle the lawsuit filed in state court in Madison County, IL, by Dr. Timothy Kaiser over bill payment claims with Cigna on behalf of himself and others. The suit then was moved to federal court and consolidated with those before Moreno.

Cigna said it expected to recognize an after-tax charge in the fourth quarter of 2002 of approximately $50 million to $65 million to resolve the doctors' claims.

Attorneys for the doctors other than those in the Kaiser suit told Moreno the settlement amount was inadequate and Cigna was attempting to avoid the full liability it would face in the broader class action.

Patrick E. Welch, president of Cigna HealthCare, said the agreement would enable the company "to use, in much more productive ways, resources we otherwise would have devoted to litigation."

Cigna admitted no wrongdoing in the agreement. But its senior vice president and chief medical officer, W. Allen Schaffer, said the company has "been working to improve our relationships with physicians and other health care providers over the past several years. During this period, we have made numerous changes, including streamlining utilization management and other processes, discontinuing many referral requirements, and improving communications with providers, all of which ultimately benefits our members."

As part of the agreement, Cigna agreed: to establish an e-mail procedure to enable providers to make inquiries regarding fee schedules and obtain claim coding information; to provide explanations of its claim coding and other payment policies; to appoint a third-party administrator to review certain claims denied since Jan. 1, 1996, to determine if they should be paid; to establish a $10 million "prompt pay fund" to compensate providers for claims that have been processed outside the company's timeliness standards; to no longer require providers to submit copies of their medical records to obtain payment for office visits occurring on the same day as separately billed surgeries or other procedures; and to pay interest on fully documented claims not paid within 30 days in those locations in which interest payments are not required by law.

In addition to Cigna, the other defendants in the class action before Moreno are Aetna, Humana, Foundation Health Systems, United Healthcare, Prudential and Wellpoint.

The first suit filed by the doctors was brought by the California Medical Association and some individual physicians in May 2000, with other state medical associations and individual physicians joining as plaintiffs to allege they had been defrauded by misrepresentations and material omissions by the insurers.