Insurance Law

Class Action Settlement Approved for Out-of-Network Providers in AMA v United Healthcare Lawsuit Related to Uniform and Customary Rates

NEW YORK - (Mealey's) A New York federal judge on Sept. 20 granted final approval to a $350 million class action settlement with United HealthCare Corp., ending claims that United companies allegedly underpaid professional providers for out-of-network services (The American Medical Association, et al. v. United Healthcare Corp., et al., No. 00-2800, S.D. N.Y.).

U.S. Judge Lawrence M. McKenna signed a motion filed by plaintiffs on Aug. 27, seeking final approval of the settlement for a suit filed in 2000 by a group of plaintiffs consisting of participants and beneficiaries in four health plans, out-of-network care providers and medical associations against multiple insurance companies, including United Healthcare Corp., United HealthCare Insurance Co., United HealthCare Services Inc., United HealthCare Services of Minnesota Inc., United HealthCare Services Corp. and Ingenix Inc. (collectively, United).

The plaintiffs contended that United's practice in determining usual and customary (UCR) rates, including their alleged reliance on the Ingenix database, violated the Employee Retirement Income Security Act, the Racketeer Influenced and Corrupt Organizations Act, terms of health benefit plans, New York's Deceptive Trade Practices statute and contract law.  Ingenix, which is a wholly owned subsidiary of United, provides the data used by insurance companies to determine UCRs.

Insured members and their out-of-network providers will be able to make claims for reimbursement from United from the $350 million settlement fund.  In addition, United agreed to enter into an Assurance of Discontinuance with New York Attorney General Andrew Cuomo, pursuant to which it will pay $50 million to fund the creation of a new database.

Judge McKenna also awarded 25 percent of the cash settlement fund, or $87.5 million, in fees and $1.5 million for expenses incurred by class counsel.

Individual class representative plaintiffs will receive $25,000 each.

"[T]he fees and expenses and compensatory awards are reasonable in light of the complexities of the case and the result," Judge McKenna said in approving the case.

He also said he found the settlement to be "fair, adequate and reasonable" and that none of the objections was reasonable.

Further, he found that the settlement did not involve any violations of ERISA.

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