Aetna Agrees to $470M Doctors' Suit Settlement

May 22, 2003 ( - Insurance giant Aetna Inc. has agreed to fork over $100 million to more than 700,000 doctors in a $470-million settlement of a lawsuit over allegations Aetna and other insurers improperly interfered with treatment recommendations through their coverage decisions.

According to Aetna and news reports, the settlement included:

  • $300 million in investments in “business-practice improvements”
  • $20 million to a new health research foundation to look into issues such as elimination of racial and ethnic disparities in health care, improvements in the way the health care system manages end-of-life care, reduction and prevention of childhood obesity, and addressing the problem of the uninsured
  • the $100 million payment to physicians, which breaks down to about $140 per doctor
  • $50 million in legal fees.

“We do not anticipate that the agreement will affect Aetna’s ability to effectively manage medical costs for its customers,” John Rowe, a doctor who is Aetna’s chairman and CEO, said in a statement. “In fact, the new climate of cooperation will further enhance Aetna’s competitiveness by increasing our ability to work with physicians on case and disease management programs, which help control medical costs by ensuring that patients receive timely care. I am also pleased that this agreement removes the major and costly distraction of this litigation from our business environment and will allow us to concentrate further on achieving our objective of profitable growth.”

Still pending are claims against a number of other insurers who have asked the US Supreme Court to review whether the doctors should have properly been grouped together as a class for the purposes of their lawsuit.

Easing Claims Processes

As part of the pact, Aetna said it would streamline its system of paying bills to reduce complexities in the coverage approval and reimbursement system. Specifically, Aetna said it would:

  • apply generally accepted medical standards in determining medical necessity for health procedures
  • offer an independent mechanism for doctors to appeal payment decisions with which they disagree
  • agree on a nationally recognized and physician-approved set of rules governing claims coding and grouping procedures
  • participate in a joint effort to develop a claims-editing software package that incorporates physician- and industry-accepted claims coding and grouping procedures
  • increase electronic connectivity and direct, Web-enabled access to Aetna systems to verify reimbursement information and track claims
  • establish a National Advisory Committee of practicing physicians to provide advice to Aetna on issues of concern to physicians

US District Judge Federico Moreno of the US District Court for the Southern District of Florida still has to approve the settlement deal.  

Aetna had revenue of nearly $20 billion last year, according to Thomson First Call. The Hartford, Connecticut-based Aetna will take a $75 million after-tax charge in the second quarter for the settlement.

The Case Continues

Still left as defendants in the case before Moreno areCIGNA, Humana, Foundation Health Systems, now known as Health Net Inc., UnitedHealth Group Inc., PacifiCare Health Systems Inc. and WellPoint Health Networks Inc.The three-year case consolidated civil suits from around the country. The medical associations of California, Texas, Georgia, Florida and others joined in the case. The American Medical Association expressed sympathy, but never formally joined.

The heart of the doctors’ complaints was that health insurers had engaged in a conspiracy by using computerized programs that arbitrarily rejected some claims or automatically downcoded claims so that lesser amounts were paid.

Lawyers for the defendants are still appealing to the US Supreme Court Moreno’s 2002 order certifying the doctors’ claims as a class action. In that order, Moreno denied requests to do likewise for anestimated 145 million HMO patients who also sued the HMOs, alleging they were denied optimum medical care (See  Doctor-HMO Fee Battle Headed for US High Court ).