WellPoint Inc. agreed Monday to pay $135 million to settle a landmark class action lawsuit brought by the California Medical Association and 18 other physician groups that accused it of systematically underpaying physicians.
The settlement of the lawsuit, which was being heard in a U.S. District Court in Miami, will require WellPoint to employ more liberal guidelines for determining medically necessary procedures that must be covered by insurance and to stop using software that automatically discounts physician bills.
The settlement with WellPoint covers actions brought separately against WellPoint Health Networks Inc. and Anthem Inc. before they merged last year to form the nation’s largest managed care company. The company, which now has headquarters in Indianapolis, was formerly based in Thousand Oaks.
WellPoint is the fifth company to settle with the physician organizations.
The other companies that have reached previous agreements include Aetna Inc., Cigna Corp. and Health Net Inc. The remaining defendants include UnitedHealth Group Inc., PacifiCare Health Systems Inc., Coventry Health Care Inc. and Humana Inc.
The case was first brought by the CMA in May 2000 accusing the HMOs of using their market power to coerce physicians into accepting lower payments. It also alleged they violated the Racketeer Influenced and Corrupt Organizations Act (RICO), which carries the possibility of tripling any damages. The health care companies sought to have the RICO allegation dropped by a federal judge, but he refused to do so.
Other state physicians organizations filed their own lawsuits and the cases were consolidated in Miami.