A federal judge approved an estimated $167 million in settlements by two managed-care companies in a massive class-action lawsuit against the nation's largest HMOs on behalf of several hundred thousand doctors. U.S. District Judge Federico Moreno in Miami signed off on the deals announced earlier this year by Health Net, Woodland Hills, Calif., and Prudential Financial, Newark, N.J. Health Net will pay $40 million to physicians, spend an estimated $80 million to improve its business process and pay $20 million in attorney fees for the physicians. Prudential, which sold its managed-care business to Aetna earlier this year, will pay $22.2 million in damages and $5 million for attorney fees. Neither company admitted wrongdoing. Among other concessions, both companies agreed to fund foundations with the aim of studying and improving managed care. Health Net and Prudential are the latest managed-care companies to resolve the civil lawsuit. WellPoint and Anthem, which merged since the case began, in July announced a $198 million settlement of their part in the case. Cigna Corp. settled for $540 million in 2004, and Aetna paid $470 million in 2003.
The more than 5-year-old suit alleges that the HMOs underpaid physicians, paid late or deliberately withheld payments. Plaintiffs attorney Archie Lamb in Birmingham, Ala., whose firm is leading the litigation, could not be reached for comment at deadline. A Prudential spokesman said the company will pay the damages but as it has sold its managed-care business, it would be unable to assure changes in policies and practices. When the settlements were announced in May, Health Net said it had already begun implementing new practices to improve physician relationships and was happy to put the dispute in the past. -- by Mark Taylor