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Lawsuit accuses HMO of coverage falsehoods

By Mark Egan, Reuters, 10/05/99

ASHINGTON - A class action lawsuit was filed yesterday against Humana Inc. alleging that the health care firm withheld information from patients about the conditions of its health coverage and that it paid doctors to deny treatment.

The multimillion-dollar uit against one of America's largest medical insurers was filed in the Miami division of the US District Court. It claims that Humana, of Louisville, Ky., concealed information about when health care would be provided and when medical claims would be approved.

Lawyers, speaking at a news conference at the Washington-based law firm of Cohen, Milstein, Hausfeld Toll, said the lawsuit was the first of its kind against a health maintenance organization and would seek ''a substantial amount'' of compensation.

Health maintenance organizations, called HMOs, were set up to contain the spiraling cost of health insurance in the United States by restricting patients' choice of doctors and other measures. But patients often complain that decisions on their health are made by low-paid office workers rather than by their family doctor.

The lawyers declined to specify how much would be sought but noted that the case covered ''millions of subscribers over four years.''

''This is the first case that has uncovered specific detailed examples of how a health care company, in this case Humana, covered up from its subscribers the true way it decided whether to approve treatment and whether to pay claims of its subscribers,'' said Neuwirth of Boies Schiller, which is representing some of the plaintiffs.

The suit seeks to compensate Humana's millions of subscribers for the value between the health care they received and the coverage promised them.

The suit also demands that Humana accurately disclose the terms of its coverage but does not seek to change the quality of health care coverage offered to subscribers.

Among other things, the suit alleges that Humana paid financial incentives to doctors to deny coverage under the health insurance plan.

The suit said that the insurance provider ''also concealed from class members that Humana provides direct financial incentives to treating physicians ... to deny coverage to individuals ... even where the proposed treatment satisfies the Humana medical necessity definition set forth in Humana's disclosure documents.''

It also claims the company paid cash bonuses to claim reviewers, something they said was aimed at encouraging the denial of claims without regard to the medical needs of patients.

''What we have uncovered is that Humana set up a system that gave cash bonuses to people who reviewed claims,'' Neuwirth said. ''What we know is that there were express amounts identified by Humana for these bonuses and that the bonuses were based principally on the number of claims that were denied.''

The suit also alleged that claim reviewers often had no medical training.

''Humana thus failed to inform [subscribers] that decisions respecting medical necessity would be made by persons without the appropriate medical experience or training to recognize medical necessity,'' the suit said.

Humana provides health insurance to about six million subscribers with almost one-quarter of its users in Florida.

This story ran on page A14 of the Boston Globe on 10/05/99.

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