Of the half a dozen major managed care companies sued by doctors in a variety of nationwide class action lawsuits, Cigna HealthCare is the first to break ranks and attempt to hammer out a draft settlement agreement. But the breakthrough is splitting the plaintiffs apart, dividing attorneys for dozens of lawsuits consolidated in U.S. District Court in Miami and attorneys for a single class action filed in Madison County, Ill.
The Illinois case, with named plaintiff Timothy Kaiser, M.D., an Alton, Ill., otolaryngologist, has been setting the pace for all the health plan lawsuits because it was the first to be granted nationwide class action status last year.
With the case due to go to trial in June, Cigna began negotiating a settlement in the spring. Those talks led to an 89-page proposed agreement that attorneys began circulating this fall, but it's no done deal.
Plaintiffs' attorneys in the Florida and Illinois cases say they stopped talking to each other several months ago, even as each side continued talks with Cigna. In fact, on Dec. 3, the Miami Court will hear a petition from attorneys there to enjoin Cigna from settling with the Illinois class.
Both plaintiffs groups agree a settlement with Cigna would set a powerful precedent. Supporters say it creates a crack in the payers' wall that would force more plans to settle. Opponents say it is only a small crack that would set a modest standard for payer concessions and lower the bar for future agreements.
The proposed settlement would require the company to disclose payment rates and claims processing methodologies, but attorneys for both sides agree it does little to change processing methodologies themselves, such as which codes are bundled.
They also say the agreement limits settlement payments to doctors by requiring them to resubmit unpaid bills and written documentation in many cases.
Lawyers who negotiated the settlement say doctors nationwide would receive at least $200 million and some practices may get as much as $1 million from Cigna.
Cigna officials say the company expects to pay considerably less than $200 million. Cigna reported $877 million in net losses in the third quarter and plans to spend $100 million in restructuring next year.
Judy Cates, a Belleville, Ill., plaintiffs attorney who helped draft the agreement, argues that doctors are impatient to settle and cannot wait years for other cases to wend their way to trial. "If you can settle now, then the next settlement will be better and the one after that will be better yet."
But Cigna says it won't sign any settlement until all major plaintiffs agree to it and renounce their courtroom claims against the company.
Cates says the settlement has received backing or strong encouragement from four state medical societies, including those in Washington and Illinois; but it is opposed by nine state medical societies, including those in California and Texas, which have lawsuits against Cigna, Aetna, UnitedHealth, PacifiCare, WellPoint and Humana that have been consolidated in U.S. District Court in Miami.
The Miami class wants substantive changes, such as forcing plans to abide by AMA advisories on whether codes should be bundled. But Debra Hayes, a Houston attorney for the plaintiffs who helped draft the settlement, says that is impossible.
"You can't force a company to do what they don't want to do, short of an act of Congress," she says.