Federal Judge Approves Cigna Settlement
[Posted 02/05/04]

A federal judge gave final approval this week to the settlement reached with Cigna in CMA’s RICO lawsuit. CMA and 18 other state medical associations agreed in September to a settlement with Cigna, one of nine HMO defendants in the case being heard in Miami by Federal District Judge Federico Moreno. The suit alleges that the for-profit HMO defendants violated federal law by using coercive, unfair, and fraudulent means to control physician-patient relationships.

In his ruling, filed with the court on February 2, Judge Moreno said the settlement is “in all respects fair, reasonable, adequate and proper, and in the best interest of the class.”

As with the settlement reached last year with Aetna, one of the other defendants in this case, Cigna has agreed to make significant changes to the way it works with physicians. Under the settlement, Cigna will make its fee schedules and payment rules available to physicians; adopt a clear “medical necessity” definition that will allow physicians to care for their patients without being second-guessed by insurance administrators; abide by fairer payment rules; not impose “all products” clauses; and establish an independent appeals process for physician billing disputes. These changes are expected to speed up payments to physicians and lower their administrative costs and are valued in excess of $400 million.

“This landmark settlement agreement builds on the foundation established by the Aetna settlement in redefining the relations between for-profit managed care and physicians,” said CMA CEO Jack Lewin, M.D. “Under this settlement, physicians will have a greater ability to go back to being physicians and taking care of their patients.”

Under the settlement, Cigna will pay two types of compensation to members of the class from two separate funds: the $30 million “Category A Settlement Fund,” which will be distributed on a prorated basis; and the uncapped “Claim Distribution Fund,” which provides compensation to physicians whose claims were bundled, downcoded, or erroneously denied on the basis of medical necessity. To be eligible for either category of compensation, you will be required to submit proof-of-claim forms.

Additional information regarding proof-of-claim submissions will be mailed to class members when all potential appeals are resolved, which will be March 3, at the earliest.

Click here for a summary of the settlement agreement prepared by CMA attorneys.

Contact: CMA’s legal information line, 415/882-5144 or legalinfo@cmanet.org.