Sign in Subscribe
Insurance industry

WellPoint Agrees to Pay $198 Million to Settle Class-Action Lawsuits with 700,000 U.S. Physicians

Strategic Insights

— 2 min read

WellPoint Inc., the nation's largest publicly traded health insurance company, has agreed to pay as much as $198 million to settle two class-action lawsuits with 700,000 U.S. physicians. The lawsuits alleged that WellPoint and other companies conspired to delay and deny reimbursements for health-care services. As part of the settlement agreement, reached in U.S. District Court for the Southern District of Florida, WellPoint will pay $135 million to physicians, contribute $5 million to a not-for-profit foundation, and pay as much as $58 million in attorneys' fees. The agreement is expected to result in a pretax expense of $103 million, or 10 cents a share after tax, in the second quarter.

Key Takeaways:

  • The settlement agreement was reached in U.S. District Court for the Southern District of Florida and will pay $135 million to physicians, $5 million to a not-for-profit foundation, and up to $58 million in attorneys' fees.
  • WellPoint Inc. will pay a total of $198 million to settle two class-action lawsuits with 700,000 U.S. physicians.
  • The settlement is expected to result in a pretax expense of $103 million, or 10 cents a share after tax, in the second quarter.
  • WellPoint has agreed to change its business practices as part of the settlement, which is expected to bring big savings to physicians in overhead costs and time spent on contesting claims.
  • The settlement does not include all defendants, with Coventry Health Care Inc., Humana Inc., PacifiCare Health Systems Inc., and UnitedHealth Group Inc. still committed to defending themselves vigorously in the litigation.
  • The trial in the suit, which has been pushed back several times, is now set for January 2006.
  • Under RICO, defendants who lose at trial can be liable for triple monetary damages.

Statistics:

  • $198 million: total amount WellPoint agreed to pay to settle two class-action lawsuits.
  • $135 million: amount paid to physicians as part of the settlement.
  • $5 million: amount contributed to a not-for-profit foundation as part of the settlement.
  • $58 million: amount paid in attorneys' fees as part of the settlement.
  • $103 million: pretax expense expected by WellPoint in the second quarter as a result of the settlement.
  • 700,000: number of U.S. physicians involved in the class-action lawsuits.
  • 13: number of states where WellPoint operates through Blue Cross or Blue Cross and Blue Shield operations.
  • 10 cents: amount WellPoint expects to pay per share after tax as a result of the settlement.

Sources:

  • A. M. Best via COMTEX
  • A. M. Best Company, Inc.
  • COMTEX (http://www.comtexnews.com)
  • WellPoint Inc.
  • U.S. District Court for the Southern District of Florida

Read more