December 2004 / January 2005 Lawsuit Update

Second insurer, Aetna, negotiates settlement in Academy-led lawsuit

A second insurer, Aetna, has negotiated a settlement for its portion of the 2002 lawsuit filed by the Academy of Medicine and several other plaintiffs against four local insurers. The Academy-led suit contends that the insurers kept insurance reimbursements to local physicians at a lower rate through illegal activities.

"The Academy is pleased that plaintiffs' counsel and Aetna have reached this point. The proposed settlement is another positive step in our efforts to keep and attract physicians to our community," said Academy Executive Director Russell Dean.

In the proposed settlement, Aetna agrees to increase local physician payments by $22.3 million over the next three years. In return, the insurer would be dropped from the suit. At its January 11 meeting, the Academy Council reviewed the settlement and voted to accept it. A fairness hearing on the Aetna settlement is scheduled for January 24 in Boone County Circuit Court.

Humana, a much larger insurer locally, agreed in a settlement last year to increase tri-state physician reimbursement by $100 million over a three-year period. In addition to the monetary settlements, both agreements call for establishing compliance committees to oversee reimbursement negotiations between physicians and the insurers beginning in 2007. Neither insurer admits any wrongdoing in the settlement offers.

Meanwhile, the Academy along with the other plaintiffs will proceed with their suit against the two remaining defendants – Anthem and United HealthCare.