Physicians and managed care executives alike found something to celebrate in a federal judge's dismissal of most provider allegations in class action lawsuits against several health plans.
U.S. District Judge Federico Moreno dismissed claims that the nation's largest health plans violated anti-racketeering statutes but said plaintiffs could resubmit arguments for those allegations.
Moreno also dismissed allegations of federal prompt pay violations and ruled plaintiffs cannot reargue those points in his court.
"This is in a very preliminary stage of litigation," says Michael Manthei, senior associate in healthcare litigation with Broad and Cassel in Fort Lauderdale, Fla. "My impression overall is that the court is going to allow this case to move forward cautiously."
Aetna officials called the March 2 ruling "very encouraging," and officials with the American Association of Health Plans say they are pleased with Moreno's ruling.
Some of the nation's biggest managed care companies, including UnitedHealthcare and Humana, also were named as defendants.
More than 50 class action cases were assigned to Moreno's courtroom in the Southern District of Florida in October. The suits accuse managed care companies of everything from anti-racketeering violations to mail fraud to extortion.
The cases were divided into provider and patient complaints; Moreno's ruling affects provider claims only.
The judge ruled that, based on the alleged facts, the plaintiffs could have a cause of action, Manthei says. "Everything will be left to be seen once the facts get out."
In his ruling, Moreno wrote that the plaintiffs must prove an enterprise--an individual, partnership, corporation or association--exists before the suits charging anti-racketeering violations can proceed.
Essentially, the ruling says that should the plaintiffs successfully prove an enterprise, the racketeering allegations can proceed. And should that threshold be met, plaintiffs have proven there are grounds for a hearing on the merits of mail fraud, conspiracy, coercion and extortion, Moreno ruled.
But Moreno also cut the legs out from under the health plans' three main arguments, including their heavy reliance on a U.S. Supreme Court ruling from June that held it wasn't a breach of fiduciary duty to financially reward physicians for keeping costs down.
"Defendants read (the Pegram vs. Herdrich case) as if it were a talisman before which all of plaintiffs' claims should fail," Moreno wrote. "Yet the Court in Pegram did not fashion an all-encompassing cloak of immunity for the healthcare industry."