Millennium ends with wave of class actions against HMOs.

Health maintenance organizations are under fire from all sides. Recently, several suits seeking class action status have been filed by consumers and doctors against HMOs.

In October, a group of lawyers filed a national suit against Prudential Insurance Co. of America (owned by Aetna, Inc., of Hartford, Connecticut) in U.S. district court in Hattiesburg, Mississippi. On November 22, the group filed suits against the following HMOs: CIGNA Corp., based in Philadelphia; Foundation Health Systems, Inc., based in Woodland Hills, California; Humana, Inc., based in Louisville, Kentucky; and PacifiCare Health Systems, Inc., based in Santa Ana, California.

The suits, filed on behalf of an estimated 32 million consumers, charge the HMOs violated U.S. antiracketeering laws and used "fraudulent and heavy-handed extortionate conduct" to limit the care patients received.

The plaintiff attorneys are seeking class action status for the suits, arguing that the HMOs participated in "a nationwide fraudulent scheme" to enroll members by promising quality health care, then denying needed services in order to increase profits.

"The plague of HMOs telling enrollees their physical health matters most while putting corporate financial health first has infected all these companies," said Richard Scruggs in a statement. (Reuters, Lawyer Group Files Suits Against 5 HMOs, Nov. 24, 1999.) The Pascagoula, Mississippi, attorney is heading the group of plaintiff attorneys who filed the suits.

Scruggs says he hopes the lawsuits will result in an industry fund that would pay damages arising from lawsuits. A cap would be placed on the amount of damages the industry would be required to pay each year.

Filing under RICO is a relatively new tactic in HMO suits. In a RICO suit against Aetna that was dismissed in October, consumers claimed the HMO got them to join by promising quality health care but secretly pressured doctors to cut costs and provide minimum care. (Maio v. Aetna Inc., No. 99-1864, 1999 WL 800315 (E.D. Pa. Sept. 29, 1999).) The suit alleged Aetna practiced false advertising. It said the HMO maintained secret internal policies driven by fiscal and administrative considerations that reduced the quality of health care services provided.

U.S. District Judge John Fullam ruled the plaintiffs had no standing to sue because the suit didn't establish a concrete and imminent injury. He agreed with Aetna's argument that the plaintiffs failed to plead proper RICO enterprise. The judge said the case theory would require that the court assume doctors would ignore ethics and put their economic interests ahead of patients' welfare. Even if the court assumed that, said Fullam, the HMO wouldn't be the proximate cause of doctors' ethical lapses.

A number of other suits against these and other HMOs are pending.

* A suit seeking class action status filed against Aetna argues the HMO withheld vital information from its members. (Conte v. Aetna U.S. Healthcare, Inc., No. 99-CV-4929 (E.D. Pa. filed Oct. 4, 1999).) The plaintiffs were covered by Aetna as an employee benefit. Although none suffered any physical injuries, plaintiff attorney Jerome Marcus of Philadelphia said consumers were harmed by the plan's withholding information, such as how doctors are paid or if they receive financial incentives that influence their medical judgment. If enrollees know how a doctor is being paid, they can weigh the doctor's advice and may choose to investigate other treatment options, Marcus said.

The suit says the HMO promises members their primary physician will act as a gatekeeper on the basis of his or her independent medical judgment but alleges Aetna gives doctors financial incentives to deviate from their judgment. The suit claims the HMO's contracts with doctors discourage them from using some treatments and medications and from referring patients to specialists.

The suit seeks compensatory damages and an injunction requiring Aetna to make fuller disclosures to HMO members that detail its agreements with doctors. Plaintiff attorneys want the court to find Aetna has a fiduciary duty to provide accurate and complete information about the nature of the benefits provided by self-insured employers under the Employee Retirement Income Security Act.

* A suit filed in federal district court in Miami in October accuses Humana, Inc., of misleading members about how it makes coverage decisions. (Price v. Humana, Inc., No. 99-8763 (S.D. Fla. filed Oct. 4, 1999),) Two police officers in Riviera Beach claim that Humana didn't tell members that cost, not medical need, is the main factor it uses to decide what medical care to approve.

Plaintiff attorney Joseph Sellers of Washington, D.C., said Humana paid cash bonuses to claim reviewers and had financial dealings with doctors "clearly designed to reduce the number of patient claims that would be approved."

Humana, Inc., has approximately 6.1 million members in 15 states and Puerto Rico. Attorneys are seeking class action status for the suit.

* A case brought by Connecticut Attorney General Richard Blumenthal in December made him the first state attorney general to file suit against an HMO. The suit against Physicians Health Services alleges the company has injured consumers by blocking their access to certain drugs based on cost rather than medical necessity. By choosing drugs for a preapproved list based on discounts it negotiates with drug manufacturers, the HMO prevents patients from receiving potentially beneficial drugs that are not on the list.

In addition to these suits filed on behalf of consumers, doctors have filed a class action in New Jersey state court against Aetna U.S. Healthcare for compensation and interest, alleging the HMO failed to pay doctors on time or at all in some cases. (Courtney v. Aetna U.S. Healthcare, No. L-664899 (N.J., Camden County Super. Ct. filed Sept. 16, 1999).) The doctors also claim they're entitled to punitive damages because the health maintenance organization allegedly violated the New Jersey Unfair Trade Practices Act.