FLORIDA CLASS CERTIFICATION OF 600,000 DOCTORS TO BE REVIEWED.

A three-judge panel of the 11th Circuit Court of Appeals unanimously agreed Nov. 21 to review whether U.S. District Judge Federico Moreno of Miami should have granted class certification to over 600,000 doctors affiliated with health maintenance organizations.

On Sept. 26, Moreno certified the physicians' class action in which they allege the nation's largest HMOs have violated the Racketeer Influenced and Corrupt Organizations Act since Oct. 4, 1955, and have engaged in a common course of fraudulent conduct to automatically delay, deny and downcode their reimbursement of health care costs and to deny expensive but necessary medical treatments.

Moreno set the trial date for May 19, 2003, and ordered discovery to start Sept. 30.

Aetna and Cigna, two of the HMOs named in the class action, Charles B. Shane, M.D., et al. v. Humana Inc., et al. (MDL No. 1334), immediately appealed the ruling to the 11th Circuit.

The 11th Circuit could take up to one year before ruling.

Meanwhile, HMO attorneys welcomed the delay in turning over documents in discovery.

In his ruling, Moreno said the doctors had not shown "certain damages will be proven on a class wide basis," but had "shown that they could be proven class wide" and "that is all that is necessary."

At the same time, he denied class status to an estimated 145 million HMO subscribers who had alleged the HMOs had violated the Employee Retirement Income Security Act since Oct. 4, 1993.

He said the common issues of law and fact in the subscribers' suit did "not predominate" over individual issues and "it is neither convenient nor desirable to accord class status to this case given its factual and legal complexities."

In comparison, he said, the common questions of fact and law in the doctors' suit predominated and said the doctors "have done more than just allege a common scheme, they have demonstrated facts which support its existence."

He said the common issues of fact in the doctors' or providers' suit include: "common automated bundling practices; common automated downcoding practices; common systematic practice of making medical necessity determinations based on non-medical criteria' automated systems to identify physicians as 'outliers;' the payment of bonuses or other incentives to claims employees; the failure to pay claims within the applicable contract and statutory time periods, and the common failure to place patients on physicians' capitation rolls until treatment is sought, depriving a physician of a portion of capitation payment."

He said the common questions of law include: "whether making payments on a basis other than the medical necessity definition contained in the Provider Agreements constitutes a pattern of racketeering activity because the literature and representations to the physician is contrary to actual practice; whether the failure to pay a claim, or the downcoding of a claim according to a new standard other than medical necessity, is a breach of contract, and whether the Defendants have agreed to lower reimbursement rates and/or slow payment schedules in a conspiracy to keep reimbursements low."

He said the doctors had shown class action would be a superior method of adjudicating the issue whether the defendants engaged in a conspiracy and common course of fraudulent conduct to automatically delay, deny and downcode payments to the plaintiff providers.

Unlike the subscribers who were unable to overcome the defendants' evidence of material variations in plan documents and oral representations made to them, he wrote, all defendants in the providers' suit had utilized computer software programs to process claims, and they had failed to show variations between the programs were substantial.

Another difference between the subscriber and provider plaintiffs, he wrote, was the providers "had shown individual subsidiaries and employers do not control the claims process, and the providers are not given various representations upon which they rely; instead, they claim the entire process is fraudulent."

In addition to individual physicians affiliated with HMOs, the plaintiffs include medical associations in California, Texas, Georgia, Florida, Louisiana and other doctors' groups.

In addition to Humana, Aetna and Cigna, the HMOs include: Foundation Health Systems (now known as Health Net), United Healthcare, Prudential and Wellpoint.