Pa. Court Grants Doctors’ Class Action Over Blues’ Reimbursements

December 29, 2006

Thousands of Pennsylvania doctors may be eligible to join a lawsuit over a Blue Cross health plan’s reimbursement rates after a federal judge granted the plaintiffs class-action status.

The suit charges that Keystone Health Plan Central systematically lowered its reimbursement rates to doctors by bundling or changing procedure codes; failing to pay legitimate claims on time; undercounting the number of patients assigned to doctors in the managed-care plan; and other practices.

The plaintiffs accuse the health maintenance organization of fraud and racketeering, paralleling a strategy used in suits nationwide over managed-care rates. Many of those suits have been consolidated in a Florida case.

The Pennsylvania case involves medical claims dating from January 1996 through November 2001, when the lawsuit was filed on behalf of a Kutztown doctor and her practice group.

The two sides have since been locked in an acrimonious battle over discovery and other pre-trial issues, U.S. District Judge James Knoll Gardner said in his Dec. 21 order.

He conducted several days of hearings in March on the question of class certification, taking testimony from former Keystone officials, an economist and others.

“The evidence does not indicate that these alleged practices have been applied only to plaintiffs Natalie Grider and Kutztown Family Practice, P.C. Rather, it appears that defendants’ practices involve all Keystone providers,” Gardner wrote in his order.

Keystone Health Plan Central, which serves central Pennsylvania and the Lehigh Valley, was co-owned at the time by Highmark Inc., a Blue Shield affiliate, and Capital Blue Cross. It had more than 6,400 participating physicians in 2001, according to court documents.

The judge upheld class-action status on two racketeering claims and a third involving the prompt payment for health care services. He rejected class certification on a breach-of-contract claim, saying they should be tried individually.

The lead plaintiffs’ lawyer, Kenneth A. Jacobsen, was out of the office on Tuesday and did not immediately return a message seeking comment. The defense lawyers listed on court documents also failed to return phone messages Tuesday.

Similar claims involving more than 700,000 physicians and at least 10 health care companies have been consolidated in a nationwide class-action suit in Florida. Several of the insurers, including Aetna Inc. and Cigna Corp., have reached settlements in the case.

According to Gardner’s order, Keystone lawyers have “vacillated” in their arguments on whether their case should be joined with the Florida suit.

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