National Class-Action Filed Against Prudential; Seeks Similar Remedy To Texas Decision

April 14, 2000

A federal class-action lawsuit filed this week against Prudential Insurance and its healthcare subsidiaries may affect several million people across the U.S. who are participants in, or beneficiaries of, Prudential employee welfare benefit plans. The action was filed Tuesday in the U.S. District in New Jersey by two class action law firms, Pomerantz, Haudek, Block, Grossman & Gross LLP and Milberg, Weiss, Bershad, Hynes & Lerach LLP. It was filed on behalf of a proposed class of all participants or beneficiaries in employee benefit plans who have received their health insurance through PruCare. The case alleges that PruCare breached the express terms of its health care plans by using procedures for determining whether proposed care is “medically necessary” that are inconsistent or conflict with generally accepted medical standards. In particular, plaintiffs claim that PruCare improperly permits non-physicians or physicians who are not qualified in the appropriate specialty to make denials of care based on medical necessity and, further, that in making such decisions, PruCare relies on actuarial guidelines developed by Milliman & Robertson Inc. when such guidelines do not reflect accepted standards within the medical community. Just this week, Aetna U.S. Healthcare, Aetna U.S. Healthcare of North Texas Inc. and Prudential Health Care Plan Inc. jointly submitted with Attorney General John Cornyn a proposed settlement of a case brought by the State of Texas on behalf of its residents. Among other things, Aetna, which purchased Prudential’s health care business in August 1999, agreed that the determination of medically necessary care will be applied on a case-by-case basis by qualified professionals. In the recently filed Prudential action, plaintiffs allege their contracts require PruCare to follow this standard and that it has failed to do so. The plaintiffs seek to compel PruCare to comply with its contractual obligations on a nationwide basis, as Aetna has now agreed to do in Texas.

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