CMA's RICO Lawsuit

How SDCMS Helps You: Policing the Health Plans, Bringing Millions Back to Physicians

CMA's RICO class-action lawsuit challenging the rapacious tactics of the for-profit managed care industry saw a further settlement in 2007, directing millions more dollars to San Diego County's physicians. Of even greater significance than the $40 million Humana settlement (roughly $1.3 million of which came to San Diego County physicians) is the settlement's prospective relief, which is valued at more than $80 million. The following award amounts were received in 2007 by San Diego County physician groups, with a total approaching $800,000:

• Scripps Medical Group: $188,541
• Sharp Rees-Stealy Medical Group: $144,297
• UCSD Medical Group: $106,577
• Anesthesia Service Medical Group: $103,196
• Emergency and Acute Care Medical Corporation: $97,265
• Children's Specialists of San Diego: $45,193
• Sharp Mission Park Medical Group: $35,347
• Children's Primary Care Medical Group, Inc.: $24,494
• Park Terrace Medical Association: $21,944
• Mercy Physicians Medical Group: $14,056

CMA as well continued to monitor the health plans in 2007 to ensure they abided by the terms of their RICO settlements. CMA filed disputes after discovering Health Net, CIGNA, and Blue Cross had each violated the terms of their respective RICO settlements in 2007.

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On May 25, 2000, CMA filed a class-action lawsuit against California's three largest for-profit HMOs - Blue Cross/WellPoint, Foundation/Health Net, and PacifiCare - seeking to stop their allegedly fraudulent and unfair business practices that improperly interfered with and controlled the physician-patient relationship. This lawsuit was originally filed in federal court in California, but was transferred to U.S. District Court in Miami and consolidated with numerous other lawsuits filed by physicians and other medical associations against a number of health plans, in front of Judge Federico Moreno. The lawsuit is based primarily on allegations that 10 for-profit health plans - Humana, Aetna, Prudential (prior to its acquisition by Aetna), CIGNA, Coventry, Health Net, PacifiCare, United, WellPoint, and Anthem - violated the Racketeer Influenced and Corrupt Organizations Act (RICO) by engaging in fraud and extortion in a common scheme to wrongfully deny payment to physicians. CMA's primary focus in pursuing this litigation was to obtain prospective relief - a court order prohibiting the plans from continuing these fraudulent and extortionate practices.

FOR IMMEDIATE RELEASE: May 25, 2000

CMA Files Suit for Injunctive Relief Against Major Health Plans Under Federal RICO Laws

LOS ANGELES - The California Medical Association (CMA) today filed a federal lawsuit against the three largest for-profit national health plans in California for imposing unfair contract terms, unnecessarily denying and delaying payments for procedures patients need, and reimbursing physicians at rates that are insufficient to cover costs.

The suit against Wellpoint/Blue Cross of California, HealthNet and Pacificare was filed in U.S. District Court in San Francisco under the civil RICO (Racketeer Influenced and Corruption Act) laws. The suit, California Medical Association v. Blue Cross of California et. al., claims that racketeering activity by those three plans has damaged the businesses of and victimized the patients of California physicians. Click here for Questions and Answers Concerning CMA's Participation in the Suit.

CMA alleges that the health plans used coercive, unfair and fraudulent means to dominate and control physician-patient relationships for their own financial gain to the detriment of both patients and physicians, the suit further states. CMA is seeking injunctive relief.

CMA President Marie Kuffner, M.D., said she hopes the lawsuit will be the last step in what has been an excruciating and lengthy effort to get the health plans to give physicians the means to care for their patients. "It is with sadness that we are forced to this last resort," said Dr. Kuffner, a UCLA professor of anesthesiology. "We as physicians have tried to work with the for-profit HMOs in the marketplace and have attempted to curb the abuses through the legislative process - all to no avail. We cannot continue to allow our patients' health to be jeopardized by corporate greed."

Dr. Kuffner stated, "For years these profit-driven companies denied needed services, interfered with medical decisions and valued dollars more than lives. We are here today to say, 'No more in the State of California.'"

More than nine million Californians, or about two thirds of those covered by for-profit plans in the state, are insured by the defendant plans. The plans had no intention of keeping their promise to provide access to quality care at a reasonable cost, CMA's suit charges. Instead, these companies have conspired to generate profits for themselves while delaying payments to doctors, denying necessary and timely care to patients, and refusing to provide the data necessary for physicians to treat their patients - hence committing fraud on both physicians and patients.

"CMA's role as plaintiff shows how crucial the health care problem is in the nation, particularly in California, where 21 million people belong to a managed care health plan of some kind," said Archie Lamb, a Birmingham, Ala. attorney who filed the suit on CMA's behalf.

Lamb already has filed a lawsuit against Aetna, Cigna, Humana and Prudential on behalf of physicians seeking national class certification.

"It is ironic that here in the state where the HMO concept was born, the abuses of managed care are most egregious," Lamb said. "We are here today to demand that the HMO industry return to the principle on which managed care was founded. The CMA, on behalf of its membership, physicians all over America, and all their patients say, 'Enough is enough.'

"The for-profit HMOs have engaged in a scheme that included lying to employers about the benefits for employees, lying to physicians about commitment to payment for quality health care and fraudulently promising patients that they would be there in the time of greatest need. And so, we start here today in California and will take this fight all the way to the East Coast, until patients can once again trust that their doctor can provide them with the care they need, free of interference by companies driven only by greed," Lamb said.