Health Net and financial-services firm Prudential Financial reached financial settlements last week that would end their roles in a massive class-action lawsuit filed against the nation's largest managed-care companies. The lawsuit was filed on behalf of about 700,000 physicians who claim they were systematically shortchanged for their services.
Without admitting wrongdoing, Health Net, Woodland Hills, Calif., agreed to reimburse $40 million to physicians and to pay $20 million to cover plaintiffs' legal fees. It also agreed to invest $87 million over four years to improve its claims-payment processes and other business practices, creating up to $300 million in additional savings for physicians, lead plaintiffs' attorney Archie Lamb told Modern Healthcare. Prudential Financial, Newark, N.J., which operated Prudential Health Care until the unit was acquired by Aetna in 1999, agreed to pay $22.2 million to reimburse physicians for unpaid claims and attorneys' fees.
Both settlements must be approved by U.S. District Judge Federico Moreno in Miami. Health Net and Prudential would be the third and fourth companies to reach settlements in the 5-year-old court battle, following Aetna and Cigna Corp., which settled for $470 million and $540 million, respectively.
The remaining defendants are: UnitedHealth Group, PacifiCare Health Systems, Humana, Coventry Health Care, Anthem and WellPoint Health Networks, the latter two of which merged in November 2004. The trial is scheduled to begin in September.