The behemoth of class action lawsuits against health plans will be heard simultaneously in one courtroom by one judge, but don't expect resolution anytime soon.
The Judicial Panel on MultiDistrict Litigation ruled Oct. 23 that more than 50 lawsuits alleging everything from deception of enrollees to mail fraud will be heard in Judge Frederico Moreno's courtroom in the Southern District of Florida.
"Transfer of all claims to . . . (the Southern District) for inclusion in the coordinated or consolidated pretrial proceedings . . . will serve the convenience of the parties and witnesses and promote the just and efficient
conduct of this litigation," the panel wrote.
Legal experts say that's what the MDL was designed to do: eliminate duplication of procedures and testimony. But despite the reduction of redundancy, these cases aren't going to be resolved for years, one attorney says.
"Once the discovery is done, the facts aren't going to be in dispute," says Michael Manthei, senior associate in healthcare litigation with Broad and Cassel in Fort Lauderdale, Fla., explaining that such items as contract incentives will either exist or cease to exist. The argument will become whether the law permits such incentives and whether delegation of deciding medical necessity is a breach of fiduciary duty, he says. "The bottom line is it's going to be a long and convoluted road."
Over the past 15 months, dozens of cases have been filed against the nation's major insurers, including Aetna, UnitedHealthcare, Cigna and Humana. A team of attorneys headed by Richard Scruggs has accused the health insurers of everything from fraud to deceit to extortion. Scruggs and his team successfully sued the tobacco industry.
The MDL's decision, albeit a procedural one, was hailed by plaintiffs' attorneys as a victory and dismissed by the insurers as simply procedural. The majority of plaintiffs wanted the cases to be heard simultaneously but wanted the cases heard in Hattiesburg, Miss. Scruggs' practice is based in Mississippi; the panel can assign a case to any district.
The six-judge panel ruled that having the cases heard in one courtroom by one judge would avoid duplication of legalities such as discovery and would prevent inconsistent rulings in the pretrial phase.
The defense attorneys argued during the hearing in late September that the cases were filed on different grounds and should be heard independently. They argued the cases were linked only in that they involved the health insurance industry.
"We are unpersuaded by these arguments," the judges wrote. "Transfer to a single district . . . ensures the pretrial proceedings will be conducted in a manner leading to the just and expeditious resolution of all actions to the overall benefit of the parties."
The panel noted that Moreno already established two separate hearing tracks, one for providers and one for enrollees, in some of the cases. Judicial panel members also pointed out that the judge set schedules for briefing and oral arguments on a company-by-company basis. Each company is expected to argue why cases should be grouped in a certain manner and why the suits filed against them are without merit.
Aetna, which is named in several of the suits, believes hearing the cases in one courtroom will be efficient and eliminates the chance of different rulings in the preliminary stages, says spokesperson David Carter. It believes when hearings are heard on the substantive issues in the cases, the insurers will prevail, Carter says, adding that three times this year federal courts have ruled for insurers.
Attorneys for the insurers are expected to request that the cases be dismissed for lack of merit and in light of a Supreme Court ruling earlier this year. The Supreme Court issued its first ruling on HMO suits in June, saying that financial incentives to physicians didn't violate fiduciary duty.
The MDL ruling didn't address the substantive issues in the case, nor did the panel rule on whether the cases had merit.
Moreno now will determine on an issue-by-issue basis whether any of the matters should be consolidated further by issue or party, Manthei says. The judge will then begin deciding whether the cases should be tossed out on summary judgment.
"There's going to be a sorting-out period," Manthei says. "Moreno is going to have more work than any judge should have.
"If there are similar substantive issues pending he may decide to consolidate all of them for ruling. (Moreno) has to go through a housekeeping phase. Once he's done that . . . we start the long hard road of discovery. From there, it's anyone's guess how it will shake out."
It's unlikely the cases will be dismissed without allowing the plaintiffs to appeal directly to Moreno, Manthei says.
A few days after the ruling, Moreno held a hearing in his Miami courtroom and made it clear he wouldn't be rushed through the cases despite a plaintiff's attorney who argued that millions of Americans were looking to Moreno to "reform the healthcare industry."
Whether he likes it or not, Moreno is faced with social policy litigation, says Kevin Outterson, a partner with Baker, Donnelson, Bearman & Caldwell, a healthcare law firm in Nashville, Tenn.
"The Constitution lays out the place for that to happen is Congress, not Article Three," the section on the judiciary, he says.
This type of social policy litigation is different than that of a generation ago, Outterson says. Attorneys for the plaintiffs early on met with analysts for the managed care companies and explained that they planned to win and could seriously damage the companies' financial statuses, attempting to force the companies to settle, Outterson says.
"When Ralph Nader went after the Pinto, he went to congressional hearings to show the dangers of the Pinto," Outterson says. "He didn't go to Wall Street to try to force down (Ford's) stock price."
The managed care lawsuits will be like the tobacco cases in that the tobacco suits never went through the entire legal process, Outterson says. "These are as much public relations battles as legal even though billions of dollars are at stake," he says.
"Most mass torts and national class actions . . . get consolidated," Outterson says. "It's an excellent procedure. The alternative to MDL is dozens of parallel cases in various jurisdictions. And it's a mess. It drives up costs."