MIAMI, May 4 – LAWFUEL – The Law News Network — Health Net and …

MIAMI, May 4 – LAWFUEL – The Law News Network — Health Net and representatives of over 700,000 physicians, state and local medical societies announced today the settlement of the national class action lawsuit pending in the federal court for the Southern District of Florida before U.S. District Judge Federico
Moreno. Final judicial approval of the settlement agreement by Judge Moreno
will extinguish liability for lawsuits filed against Health Net over the last
10 years or more by physicians and physician groups.

The settlement document provides improvements to physician-related
business practices as well as cash payments to physicians in accordance with
specific terms outlined in the agreement. The agreement will also enhance
communication between physicians and Health Net, reduce administrative
complexity in the claims payment system and help improve the quality of the
health care delivery system. These changes are expected to result in increased
predictability and speed of claims payment, creating significant value for
physicians by reducing time-consuming and costly administrative burdens and
giving physicians and their office staffs more time to focus on their central
mission — providing health care to patients.

“This settlement places an ailing health care system on the road to
recovery through a set of commitments which are premised upon achieving the
highest quality health care,” said Edith Kallas, partner with Milberg Weiss
Bershad Hynes & Lerach in New York.

“I believe that this settlement represents a major step forward in helping
physicians go back to doing what they do best — taking care of their

It is also a positive step for Health Net in that it can leave behind
years of an adversarial relationship with physicians and forge a new era of
cooperation with them.

Health Net has now joined Aetna and Cigna as managed care organizations
that truly value a positive relationship between insurers and physicians,
something which can only serve to benefit employers who seek the best care for
their employees,” said Tim Norbeck, executive director of the Connecticut
State Medical Society.

The economic details of the settlement include a guaranteed cash payment
to physicians of at least $60 million. The dollar value of savings to
physicians could equal approximately $300 million over coming years. The
total value to physicians of today’s agreement is in excess of $360 million.

“CMA began the battle against California’s largest for-profit health plans
— Blue Cross/Wellpoint, Health Net and PacifiCare — five years ago, when it
became obvious that insurance companies were promising patients one thing to
sell a policy and then doing the opposite when it came time to deliver health
care,” Dr. Michael Sexton, M.D., CMA president. “This is a victory for
physicians and patients. It is a shame that other health plans are still
delaying doing what is right for patients.”

“This settlement provides significant gains for physicians and patients,”
said Dr. Jack Lewin, M.D. “We hope it puts leverage on the other health plan
defendants to move ahead and resolve this suit without the need for a
protracted trial. Most important, settling the suits means we can spend our
time and resources working together on quality of care, patient safety, and
expanding access together — and that’s where we need to be.”

In addition, the physicians have agreed to a $22.2 million settlement with
Prudential Financial, Inc., which operated Prudential Health Care until it
sold the subsidiary to Aetna in 1999. Because it has been out of the health
care business for nearly six years, Prudential does not have the ability to
implement any of the policy changes we have obtained from the other settling
parties. Indeed, the policy changes with respect to Prudential Health Care
were obtained as part of a 2003 settlement with Aetna. Under the
circumstances we (and Prudential, which has not admitted any wrongdoing)
agreed that a costly trial of any of the disputed issues with its former
health care subsidiary would not be in the interest of either side.

“These two agreements recognize the over-riding importance of the
physicians’ input in all healthcare decisions. Health Net’s agreement to be
bound by these innovative industry guidelines demonstrates that only by a
commitment to partnership can the true goal of quality healthcare be
achieved,” noted Co-lead Counsel for the physicians, Archie Lamb of The Lamb

The California Medical Association is the professional organization of
35,000 California physicians, representing all modes of practice and

For additional details or to schedule an interview, please contact Audrey
Mullen at 703-548-1160.

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