In a setback for doctors' class action lawsuits against health plans, the U.S. Supreme Court has ruled that doctors must first take their cases to arbitration for some of their claims.
Specifically, the high court's unanimous decision on Monday mandates arbitration for part of the claims brought against PacifiCare Health Systems, of Santa Ana, Calif., and UnitedHealth Group, of Minnetonka, Minn.
Lower courts had previously ruled that cases against other defendant plans--including Aetna, WellPoint and Cigna--already had to go to arbitration for some in the lawsuits, which have to do with the way health plans deal with doctors' payments, such as use of downcoding and bundling.
In contrast to the class action lawsuits in federal court, which involve 600,000 doctors nationwide, arbitration requires that each physician individually pursue his or her own claim against the plan. Since this is time-consuming for doctors, few doctors are expected to enter arbitration.
But lawyers for the plaintiffs, representing several medical societies, insist that the high court's decision does not destroy their case.
The decision, they say, sends only one track of claims to arbitration, leaving another track with essentialy the same allegations on policies such such as coding and bundling in federal court in Miami.
"The way this case is structured, we get two bites of the same apple," says Archie Lamb, an attorney for the plaintiff medical societies.
The Supreme Court decision deals only with United and PacifiCare because they were the only defendants who were excluded from arbitration under the lower courts' decisions, attorneys familiar with the case say.
The lower courts treated them differently because their contracts with doctors specifically exclude punitive awards. The lower courts ruled that punitive awards include treble damages required by the Racketeer Influenced and Corrupt Organizations Act (RICO), one of the key allegations against health plans by the plaintiffs.
But in the Supreme Court ruling, Justice Antonin Scalia dismissed that argument, writing that "it is unclear whether the agreements actually prevent an arbitrator from awarding treble damages under RICO."
He adds that "the Court has repeatedly acknowledged that RICO's treble-damages provision is remedial in nature, and it is not clear that the parties intended the term 'punitive' to encompass claims for treble damages under RICO."
Lamb says the Supreme Court's decision will not affect another avenue of the RICO cases, which allege aiding and abetting and conspiracy, Lamb says.
In addition, he says doctors without arbitration agreements in their contracts can proceed in the class action with all of their their claims.
"Everything is stil left on the table," Lamb says. "The primary thrust of the doctors' claims is still intact."
Meanwhile, the medical societies and Cigna representatives will enter mediation on Thursday to discuss a settlement drafted by Cigna and attorneys in Illinois, Lamb says.
He adds that he andother attorneys for the plaintiffs are in the middle of discovery, which involves gathering evidence from the defendant health plans.