Doctors Settle Class Action Against N.J.’s Largest HMO

By | October 17, 2006

Doctors have reached a deal to settle their class-action lawsuit claiming New Jersey’s largest health maintenance organization shortchanged thousands of physicians.

Under the proposed agreement with Horizon Blue Cross Blue Shield of New Jersey, the HMO agreed “to continue significant business practice improvements,” according to a joint statement issued by the doctors and the Newark-based company that was provided by a lawyer for the doctors.

The attorney for the doctors, Eric D. Katz, said that the doctors do not get any money under the deal, but that Horizon will pay lawyers’ fees. The doctors had charged that Horizon and three other health insurers routinely shortchanged thousands of physicians through late or improperly reduced payments.

If approved by a state judge, the deal will end Horizon’s involvement in a lawsuit filed in 2002 on behalf of at least 40,000 New Jersey doctors.

Also sued were Cigna Healthcare of New Jersey Inc., a part of Cigna Corp., of Philadelphia; United Healthcare of New Jersey Inc., a unit of UnitedHealth Group of Minneapolis; and Oxford Health Plans Inc., of Trumbull, Conn.

Since then, the Cigna and United Healthcare cases have become part of other national class-action cases in Florida. The case against Oxford, whose parent company merged with UnitedHealth in 2004, is in arbitration, Katz said.

Horizon, which insures more than 3.2 million people in New Jersey, did not admit any wrongdoing in the settlement, said company spokesman Thomas Rubino.

Horizon is to take several steps, according to the joint statement. These include:

Making fee schedules for commonly used procedures available to participating physicians by CD-ROM or electronically.

Providing 90 days notice to participating physicians of material changes to its contracts, policies and procedures.

Allowing participating primary care physicians to close their practices to new patients covered by Horizon.

Not reducing fees for participating physicians, if at all, more than once a year.

Not recovering overpayments to physicians more than 18 months after the original payment.

Not revoking its own determination of medical necessity without evidence of fraud, significant error or a significant change in the condition of a patient prior to service.

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