UnitedHealth Settlement Near, but Faces a Protest
By Reed Abelson
New York Times
Friday, January 16, 2009
The insurance giant
UnitedHealth Group said Thursday that it had reached a $350
million deal to settle class-action lawsuits claiming it had
underpaid patients and doctors.
Not so fast, said one of the lawyers for the plaintiffs.
She says the money is not enough and has filed an objection with
one of the judges overseeing the cases.
“We believe the amount agreed to is inadequate and does not
reflect as meaningful a settlement as could be negotiated,” said
the lawyer, Barbara Quackenbos, whose firm is one of several
handling the cases on behalf of patients and doctors.
The UnitedHealth announcement came after a related settlement
the company announced earlier this week with
New York’s attorney general, Andrew M.
Cuomo, in which the company agreed to stop operating the
databases used by the insurance industry to calculate payments
to patients when they use doctors outside the insurer’s
preferred network of physicians.
In Thursday’s announcement, UnitedHealth hailed the proposed
class-action settlement as resolving numerous lawsuits around
the country by patients and doctors claiming that the
out-of-network payments were too low for many years.
“We are pleased to have reached an agreement that provides
closure on these matters,” Mitchell E. Zamoff, a senior lawyer
for UnitedHealth, said in a statement.
But the objections of Ms. Quackenbos and some of the other
lawyers involved make it less clear whether the two federal
judges, one in New York and the
other in New Jersey,
overseeing the lawsuits will approve the settlement as outlined
Earlier this year, in a case involving similar issues but a much
smaller insurer, Health Net, the same
New Jersey judge approved a $255 million
settlement. Ms. Quackenbos, whose
N.J., firm Wilentz, Goldman &
Spitzer represented plaintiffs in that case, said that by the
Health Net standard, the UnitedHealth settlement should be
larger than $350 million.
The proposed settlement covers three lawsuits against
UnitedHealth, including one brought in federal court in
New York by the American Medical
Association and others.
Asked later in the day about the objections of Ms. Quackenbos,
the company issued a statement: “This agreement was the
product of vigorous arm’s-length negotiations and is supported
by the American Medical Association, the Medical Society of New
York and experienced class counsel. The New York attorney general
commented favorably on the settlement today. We are
confident the agreement will be approved by the court.”
Mr. Cuomo had indeed referred to the settlement Thursday, as he
announced his own agreement with another insurer,
Aetna, on the industry database issue. Asked
later about the objection of Ms. Quackenbos, he said the exact
amount of any settlement was a matter of private litigation and
subject to final court approval.
Insurers typically agree to pay 70 to 80 percent of the
“reasonable and customary” local market rate for out-of-network
medical services. An investigation by Mr. Cuomo’s office
concluded that the database had understated the true market
rates of medical care by up to 28 percent.
The proposed settlement with UnitedHealth covers those patients
with out-of-network claims and their doctors whose
reimbursements were determined using the customary and
reasonable rates. If it is approved, the $350 million will
be distributed to both patients and doctors, although the
details of how the money will be allocated have not been
Anyone who is eligible under the settlement will be notified in
writing or through advertising, a UnitedHealth spokesman said.
Aetna, another big insurer in
New York, announced on Thursday an
agreement with Mr. Cuomo’s office to contribute $20 million
toward the new databases. UnitedHealth has agreed to
contribute $50 million. Both have agreed to use the new
Mr. Cuomo said he would try to persuade the rest of the
insurance industry to support and use the new databases under
the independent operator as a way of helping patients in the
future. “We will not stop until the entire industry has
been reformed in this regard,” he said.
Aetna faces some lawsuits over the same issues
as UnitedHealth. The company says they are still pending
and it plans to defend itself vigorously against the