No industry is perfect, especially those that make a profit keeping people healthy. Health insurance has certainly seen its deceptive, challenging and faulty days. Entrusting large sums of money to a company who supposedly has your best interest (health) in mind, has gone awry many times in the past. Sometimes, charges are pressed in a feud of provider versus insurer, and the reverse. In other cases, charges are pressed by fundamentalists who want their religious civil liberties of sexist discrimination maintained. The wide gamut of health insurance-related lawsuits spans from carrier fraud to the constitutionality of mandatory insurance. From the claim denial scam tactics of MEGA Life several years ago, to the hoards of class actions against legitimate insurers like United Healthcare, health insurance is continually required to shift gears.
Though there are many cases and settlements currently arising and that have been settled in the past, we hope to provide a bit of background in some of the most significant lawsuits in a big year for health insurance and politics. These are not important in that they deface our industry, but in that it helps every consumer know their own rights, how the industry has been modified and held accountable and what the law does to protect individuals and business practices. The birth control mandate lawsuits received plenty of press, as more and more organizations, churches and schools filed cases against the health care law regarding insurance coverage of contraceptives. However, the world didn’t end in 2012, and neither did Obamacare.
2012 Health Insurance Lawsuits
United Healthcare & Mental Health Care
In May 2012, a class action was filed against United Healthcare Insurance Company in California, as well as US Behavioral Plan and California United Behavioral Health (who are contracted providers under United) for allegedly restricting mental health care. The class action lawsuit states these companies are in violation of the Mental Health Parity Act, which establishes that coverage for mental health care be the same as those set for physical health care.
Particular instances of this violation were displayed when the companies supposedly denied and limited coverage by holding reviews of regular outpatient treatments for mental health, whereas a review for another type of regular outpatient medical care would not occur.
United was also accused of violating the Unruh Act, by treating policyholder with mental illness and psychiatric conditions unfairly, as well as breaching the terms of its own contract, and violating the state’s law against unfair competition. The plaintiff filing the suit was seeking outpatient psychotherapy services four times a week, which United told her she would have to cut back to one session per week for one month in 2011.
The case has not yet been settled, thought it represents an important part of health care. Though the Mental Health Parity Act and other laws are in place, it seems some insurers still try to cut corners with patients who have a certain class of health needs. The lawsuit aims to clear up any other form of mental health discrimination against University of California employees who have had issues obtaining proper coverage, like the plaintiff.
Religious Organizations & the Birth Control Mandate
The new policy passed by the health reform law to help millions of American women by covering the cost of birth control through all forms of health insurance has caused nearly 50 religious employers across the country to file lawsuits. Just yesterday, The Roman Catholic Archdiocese of Atlanta jumped on board, and 43 plaintiffs including the University of Notre Dame had filed by May of this year.
Even companies like the arts and crafts chain, Hobby Lobby, are complaining of the law violating their religious beliefs and ethical views by passing this law onto employers who offer health insurance. The Patient Protection and Affordable Care Act does address that religious employers may be exempt from the law, though the accusing forces in Atlanta claim they are unsure whether they qualify.
Throughout the year, the birth control-related lawsuits have been coming from more and more organizations, which have not yet been formally addressed by the Supreme Court. The Obama Administration has been careful to respond to these concerns, as they continually pile up, and they are handling it at the moment by promising no penalties will be issued at least through January 1, 2014.
As with the ACA’s individual mandate, employers who refuse to provide any of their health plan’s mandatory benefits must pay a penalty for not complying with the law. The ACA also states that religious organizations may be able to receive a waiver to excuse them from paying the penalty if following the law goes against their beliefs. Experts say the courts will likely not address these cases formally and continue with the law.
The Supreme Court & The Affordable Care Act
Not much needs to be said about this one. One of the most heavily broadcast and reported political and legal events of the year was resolved in late June 2012, upholding many parts of the Affordable Care Act. The case materialized when 26 states and the National Federation of Independent Businesses (NFIB) accused Congress of violating the constitution for requiring individuals to obtain health insurance, and forcing states to expand their Medicaid programs.
In the most serious of attempts to bring down the health care law for any given reason, a compromise was made by keeping a large number of the provisions, and omitting some key ones, as well. The final ruling from the Supreme Court decided the individual mandate was constitutional as a tax, and that penalizing a state for keeping their Medicaid programs limited was unconstitutional. By making the requirement for civilians to obtain insurance legal, the Supreme Court also kept provisions regarding equal coverage to people with pre-existing conditions, mandatory preventive care benefits, and regulating the fairness of health plans.
Medicaid was very much hurt by this ruling, as expansion is now optional without a state penalty. This means the states who were rallying together to push this law out completely will not be likely to choose the option of expanding Medicaid in their state, though we will find out in 2014. Making health insurance affordable and improving access to healthcare for all Americans were the driving forces behind this law, which is heavily thwarted by eliminating broader access to public assistance. The country’s low-income population is continually underserved, and the Supreme Court ruling makes it possible to continue being selective in caring for the needy.
Many Americans will benefit from this law being passed, even with the option of Medicaid expansion. It is a landmark law, indeed, and has already planted the beginnings of a more equal and just health insurance and health care system. Lasting from March to June, the Supreme Court ultimately decided the law was overall constitutionally sound, and after the 2012 election secured the ACA in legislation, America had begun to scratch the surface in health care by offering an affordable means of insurance.
Aetna Out-Of-Network Coverage
In the summer of 2012, another insurer was sued for illegal practices in California. Aetna, Inc. was accused by several hundred doctors of denying patients coverage for which they had already paid. A class action lawsuit was filed, claiming Aetna refuses to cover out-of-network providers regardless of patients paying for a plan allowing them to use such doctors. Aetna is allegedly punishing policyholders and doctors alike for not using the Aetna preferred provider network for outpatient care.
The company had been threatening patients with denial of coverage for seeking care outside the network, and threatening doctors with canceled contracts if they referred patients to a non-network provider. The lawsuit accused Aetna of false advertising, breach of contract, unjust business practices, and both intentional and negligent interference with doctors. An Aetna representative denied the charges and claimed the doctors are retaliating for a lawsuit Aetna filed against numerous California surgery centers.
Aetna’s lawsuit claimed these surgery centers, managed by Bay Area Surgical Management, referred Aetna members to facilities without recognizing that the doctors had an ownership interest in the center, or that they received compensation for each referral. The health insurer alleges the centers were overcharging patients and their billing practices were unacceptable. Some of the doctors and facilities suing Aetna were identified by the carrier as providers whom they were suing. The Aetna spokeswomen claimed it was a countersuit disguised as a class action.
The providers suing Aetna are seeking an immediate injunction to end Aetna’s supposed illegal practices, as well as compensation for patients and physicians, and punitive damages. Sixty named doctors, nine surgery centers, the Los Angeles County Medical Association, California Medical Association, and a coalition of health care organizations and providers supporting this lawsuit and testifying against Aetna.
WellPoint Inc. and Anthem Insurance Company
Though begun in 2005, the class action lawsuit filed by former members and owners of Anthem Insurance against its current ownership. Resolved by Anthem’s parent company, WellPoint Inc., the was recently settled in June of 2012. WellPoint ended up paying $90 million as a settlement payment to the thousands of plaintiffs. The case was brought forth by those who claimed they were not paid sufficiently when Anthem converted from a mutual company to a stock corporation in 2001.
Anthem’s owners were joined by 700,000 former members from the original mutual company standing to be paid the proper value of their membership interests. Non-mutual, present-day Anthem paid each former mutual company member $39.60 per share, but the plaintiffs’ experts claim the dollar value should have been in the mid-40s. In order to avoid a jury trial, the settlement of $90 million was accepted by the plaintiff and approved by a federal judge.
The former members of Anthem include residents from Ohio, Indiana, Kentucky and Connecticut, and because the Anthem headquarters are located in Indianapolis, the settlement was historical in the state of Indiana. Fortunately for Anthem plan members, the company’s shareholders were the only ones truly affected by this lawsuit, with a lowered profit forecast that made a mild impact on WellPoint stocks. Overall, whether a policyholder or a shareholder, Anthem members had little to worry about as a result.
1. Lawyers and Settlements. “United Healthcare faces Class Action over Restricted Mental Health Coverage”. http://www.lawyersandsettlements.com/lawsuit/united-healthcare-faces-class-action-over-restricted.html#.UHg-XxjOaXc.
2. Atlanta Journal-Constitution. “Archdiocese files suit over birth control mandate”. http://www.ajc.com/news/news/local/achdiocese-files-suit-over-birth-control-mandate/nSZDh/.
3. The Washington Times. “Supreme Court to hear health care suit in March”. http://www.washingtontimes.com/news/2011/dec/19/supreme-court-hear-health-care-suit-march/?page=all.
4. Top Class Actions. “Aetna Out-of-Network Provider Class Action Lawsuit”. http://www.topclassactions.com/lawsuit-settlements/lawsuit-news/2101-aetna-out-of-network-provider-class-action-lawsuit.
5. Reuters. “Wellpoint to Settle Class Action Suite for $90 Million”. http://www.reuters.com/article/2012/06/15/us-wellpoint-settlement-idUSBRE85E1F020120615.
6. Cleveland Business. “Anthem Insurance parent WellPoint Inc. to distribute $90 million to settle lawsuit”. http://www.crainscleveland.com/article/20120618/FREE/120619852#.
7. Image: Mint.com. “MintLife Blog”.