Tuesday, October 5, 1999

Suit: Humana misled members
Cost, not need, alleged to be main factor

From news services

NEW YORK - A lawsuit filed yesterday against Humana Inc. accuses Florida's second-largest health maintenance organization of misleading members about how it makes coverage decisions.

The suit, seeking class-action status, alleges that Humana didn't tell customers that cost - not medical need - is the main factor behind the health plan's decisions on what medical care it approves for members.

''Humana used undisclosed criteria that were unrelated to patients' medical needs,'' said Joseph Sellers, a partner in the law firm of Cohen, Milstein, Hausfeld & Toll.

Louisville, Ky.-based Humana paid cash bonuses to claim reviewers and had financial arrangements with doctors ''that were clearly designed to reduce the number of patient claims that would be approved,'' the suit says.

Humana officials said they could not comment on the specific allegations because they did not have a copy of the suit. But the company said it planned a vigorous defense.

It also said it supports a process whereby independent physicians determine whether a requested health service is appropriate.

One of the nation's largest managed health care companies, Humana has about 6.1 million members in 15 states and Puerto Rico. In Florida, the HMO has more than 700,000 policyholders, including about 100,000 in a seven-county region that stretches from the Georgia border to Daytona Beach.

Humana also operates a service center in Jacksonville.

The lawsuit was filed in federal district court in Miami on behalf of two Riviera Beach police officers.

The lawsuit is the first of many that several powerful lawyers, including some who gained high profiles in litigation against tobacco companies and Microsoft Corp., plan to file in coming weeks to challenge coverage decisions of HMOs.

Sellers' Washington, D.C., firm filed the lawsuit along with the firm of Boies & Schiller of Armonk, N.Y. David Boies of Boies & Schiller, is a leading attorney working for the Justice Department's antitrust case against Microsoft.

The lawsuit comes as the U.S. House of Representatives prepares to take up legislation that would expand patients' right to sue their managed care plans under state malpractice laws.

The Florida lawsuit seeks treble damages under the Racketeer Influenced and Corrupt Organizations Act.

Plaintiffs complain that Humana failed to disclose that it provides ''direct financial incentives to treating physicians and other health care professionals to deny coverage'' even if treatment met the company's own definitions of medical necessity.

''There has been this widespread and willful failure to disclose that cost was the overwhelming factor in making health care decisions,'' Sellers said.

The Humana suit was brought by Regina Joi Price, a sergeant in the Riviera Beach police department, and Anthony Sessa, a Riviera Beach police officer, on behalf of all members of Humana health-care plans.

Sellers said the lawsuit against Humana has nothing to do with the debate on Capitol Hill over whether patients can sue insurers for denials of coverage.

The Humana case only involves whether Humana correctly disclosed the basis on which its coverage decisions were made, Sellers said. The case argues that Humana didn't live up to guidelines in the Employee Retirement Income Security Act, which regulates health and retirement benefits plans that companies provide employees.

Stephen Neuwirth, an attorney in Boies' law firm, said ERISA requires that health insurers disclose information on benefits to patients, including how benefit decisions are made. ERISA entitles subscribers to collect the difference between the premium they paid and value of the coverage they actually received.

Last week, Aetna won dismissal of a racketeering lawsuit brought by members of its managed-care plans who contend the company engages in false advertising by touting itself as offering quality health care.

Senior U.S. District Judge John P. Fullam of the eastern district of Pennsylvania concluded that Joseph and Joann Maio and Gary Bender couldn't prove they were tricked into joining Aetna's HMO plans by the company's claims that it focuses on providing top-quality health coverage. That suit also sought class-action status.

This report contains information from The Associated Press and Bloomberg News.

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