A Louisiana jury ruled against Health Net, Woodland Hills, Calif., awarding $117.4 million in damages in a lawsuit stemming from the insurer's sale of a Texas subsidiary that later went bankrupt. Health Net said in a news release that it plans to "vigorously" appeal the verdict. In April 1999, Health Net sold health plans in Texas, Oklahoma and Louisiana to AmCareco, Houston. In 2002, all three plans were placed into state receivership, and the receivers sued AmCareco, Health Net and others for fraud, negligence, conspiracy and breach of fiduciary duty. The jury award -- which relates only to the sale of the Texas health plan -- consists of $52.4 million in compensatory damages and $65 million in punitive damages. But because the jury allocated 15% of the compensatory damages to "other parties," Health Net said it expects the verdict amount to be revised downward. The judge in the current case is also conducting a bench trial on the sale of the Oklahoma and Louisiana health plans and will render a separate judgement later. The plaintiffs in those cases are seeking a total of $30 million in damages.
Separately, a confidential settlement was reached in a lawsuit that accused HIP Health Plan of New York of hiding key financial information when its sold its Florida managed-care unit to the company that became Vista Health Plans of Florida. The agreement came one day after a Florida jury awarded Vista and its physician-owner, Steven Scott, $38 million in compensatory damages and had begun weighing punitive damages. That award was voided under the current settlement. Scott alleged in the lawsuit that the Florida unit's unpaid claims at the time of purchase were $16 million higher than HIP originally stated and that 5,000 lucrative customers disappeared after the sale closed in October 2000. The $40 million acquisition was one of four Scott made as he assembled money-losing HMOs into Vista. -- by Laura B. Benko