UnitedHealth Group will pay $350 million to settle a class-action lawsuit brought by the American Medical Association on behalf of physicians and patients alleging the companys health plans used flawed data administered by its subsidiary Ingenix to justify low reimbursement for out-of-network care.
The proposed agreement contains no admission of wrongdoing. It comes two days after a separate deal was announced between UnitedHealth and New York Attorney General Andrew Cuomo requiring Ingenix to discontinue the databases and turn them over to a university that will establish an independent, not-for-profit substitute. The Ingenix products are used not only by UnitedHealth but also many other insurers. Also today, Aetna agreed to contribute $20 million toward Cuomo's independent data source and be a subscriber when it's available, settling any claims the attorney general might have against the company as a result of the investigation. Aetna likewise admits no wrongdoing.
"By using a flawed database to determine reimbursement rates for out-of-network care, insurers have increased profits at the expense of patients and physicians,"
said AMA President Nancy Nielsen. "By agreeing to the settlement, UnitedHealth Group has recognized the importance of restoring its relationship with patients and physicians by ending use of a rigged database."
In a news release, UnitedHealth said it believed the two agreements should completely resolve the issues raised in the lawsuit and Cuomos investigation. Cuomo, meanwhile, said he will continue looking into similar practices by UnitedHealths peers.
In four iterations of a lawsuit filed in 2000 in U.S. District Court in New York, the AMA argued UnitedHealths rate-setting practice violated the Employee Retirement Income Security Act, the Racketeer Influenced and Corrupt Organizations Act, and antitrust law. Many of the arguments survived UnitedHealths motion to dismiss in an August 2008 opinion.
UnitedHealth said it would cover the settlement with cash on hand and will be included as operating costs in its fourth-quarter financial results for 2008. The proposed settlement is subject to court approval.