Suing managed-care plans for managing care and costs is like suing babies for crying. That's what they do.
But three recent lawsuits challenge that notion, threatening the fundamental elements of managed care. A host of similar lawsuits are expected to follow.
The legal actions include a first-of-its-kind suit seeking class-action status against Humana, Louisville, Ky., and two similar suits against Aetna U.S. Healthcare, Blue Bell, Pa. (Oct. 11, p. 14).
The suits portray managed-care basics-such as capitated risk-sharing arrangements and utilization review-as fraudulent efforts by HMOs to control costs by denying promised coverage to commercial enrollees.
"Humana consistently told subscribers to its plans that coverage and treatment decisions under Humana policies will be made on the basis of 'medical necessity,' " the suit stated. "Contrary to these representations, however, Humana did not provide coverage or review claims solely, or sometimes at all, on the basis of medical necessity." The Aetna suits make similar claims.
Some lawyers, including Stephanie Kanwit of Epstein, Becker & Green in Washington, said the plaintiffs will have trouble proving their claims and convincing judges that the cases warrant class-action damages.
"They're basically the same old claims in new clothing," she said.
These cases could be tough to win because numerous federal and state healthcare laws have mandated the same kinds of cost control measures that the lawsuits are attacking as fraudulent, Kanwit said.
Also, managed-care companies can marshal numerous studies and surveys showing that controlling costs and effectively managing care can work in tandem.
"I think this initial round is going to fail. The claims are sort of feeble," said Stephen Richards, a healthcare lawyer at Latham & Watkins in Los Angeles. But there will be multiple rounds, he said.
So far, the industry has responded to the lawsuits by launching an advertising campaign targeting trial lawyers and painting the trial bar as the enemy of affordable healthcare.
"We think these suits will be shown for what they are-spurious charges made for the enrichment of trial lawyers," said Susan Pisano, spokeswoman for the American Association of Health Plans, which represents more than 1,000 health plans.
Pisano said her association is preparing a comprehensive counterattack, but the plan has not been fleshed out yet.
Neither the AAHP nor the Health Insurance Association of America appears ready to fight the legal battle from the front line, preferring to focus on political and public relations efforts while their members contest their individual lawsuits.