Physicians v WellPoint, Inc., Anthem Blue Cross and Blue Shield, Coventry, Health Net, Humana Health Plan et al
WellPoint to Pay Up to $198 Million for Class-Action Settlement
WellPoint Inc., the nation's biggest publicly traded health insurer, said July 11, 2005 it will pay up to $198 million to settle two class-action lawsuits brought by representatives of more than 700,000 doctors over alleged unfair payment practices.
As part of the settlement, the Indianapolis-based company said it has agreed to pay $135 million to doctors and contribute $5 million to a nonprofit foundation aimed at improving health care for the disadvantaged. It also said it would pay legal fees of up to $58 million, in an amount to be determined by the court.
The physicians contended they have been systematically cheated by insurance companies that programmed computers to pay for less intensive services than were actually provided.
The settlement will result in a pretax expense of $103 million, which will cut second-quarter earnings by 10 cents per share after taxes. WellPoint, the nation's leading health benefits provider with 28.5 million members, operates mainly under the names Blue Cross and Blue Shield.
If approved by the U.S. District Judge Federico Moreno, the agreement will settle two national lawsuits against WellPoint Health Networks Inc. and Anthem Inc., which merged last year to create the current company.
One suit pitted a nationwide class of physicians against major national managed care companies, while a second lawsuit was brought against the Blue Cross Blue Shield Association and Blue Cross and Blue Shield companies, WellPoint said.
Health Net, Prudential, Aetna and Cigna previously settled with the doctors. Coventry, United Health, PacifiCare and Humana remain as defendants, with the case set for trial in Miami in January.
