On September 20, 2010, Judge Lawrence M. McKenna of the Southern District of New York issued an order granting final approval of a historic $350 million class action settlement with UnitedHealth Group (“UnitedHealth”), resolving a nearly decades-long challenge to its practices involving reimbursement for health care services by out-of-network providers. Pomerantz LLP served as Lead Settlement Counsel.
The $350 million settlement, which was expected to grow to more than $362 million after guaranteed interest was added, represented the largest single private health care Employee Retirement Income Security Act (ERISA) settlement ever reached. It provided that insured members and their out-of-network providers were entitled to make claims for reimbursement for United Healthcare’s inadequate reimbursement levels.
In addition to the monetary component, the settlement also included substantial injunctive relief to alter how the industry was to determine usual, customary and reasonable (‘UCR”) rates for out-of-network health care services. United Healthcare also agreed to enter into an Assurance of Discontinuance with the New York Attorney General, pursuant to which it would pay $50 million to fund the creation of a new and independent UCR database. The new database would replace the old databases promulgated by Ingenix, Inc., a wholly owned subsidiary of United Healthcare, which are used by numerous insurers to set usual, customary and reasonable (“UCR”) rates for out-of-network services. The Ingenix databases were alleged to be inherently flawed and unable to establish proper UCR rates.
An October 26, 2010, article by Alison Leigh Cowan in The New York Times highlighted the Pomerantz Firm’s primary role in achieving the historic settlement and in jumpstarting the New York Attorney General’s investigation into Ingenix on behalf of consumers. Pomerantz attorneys had been trying to interest the AG’s office in these issues for some years. As the story reported, a “breakthrough [in the NYAG’s investigation] came when lawyers for the attorney general’s office consulted” with Pomerantz attorneys, leading to a “collaboration” between the AG’s office and Pomerantz that “brought results.”
In the action, Pomerantz represented not only a number of health care subscribers and providers, but also various medical associations and New York State-based unions which supported the settlement. The medical associations included the American Medical Association, the Medical Society of the State of New York and the Missouri State Medical Association, while the union plaintiffs included the Civil Service Employees Association, New York State Police Investigators Association, New York State United Teachers, and the Organization of New York State Management/ Confidential Employees.
Case Name
American Medical Association et al. v. United Healthcare Corporation et al., No. 1:00-cv-02800 (S.D.N.Y)
Class Period
March 15, 1994 through November 18, 2009
Claims
Violations of the Employee Retirement Income Security Act (ERISA)