Health Net Members Get Mega-Dollar Settlement

A US District Court judge in New Jersey has approved a $255 million settlement in a class-action suit that involved members of California-based Health Net who used out-of-network physicians. The suit alleged that members who received care from out-of-network doctors and healthcare facilities got less money than they should have because the health insurer used an “invalid” database to determine reimbursement amounts. Under the settlement, Health Net will pay $215 million to the plaintiffs and make another $40 million worth of business practice changes.

A US District Court judge in New Jersey has approved a $255 million settlement in a class-action suit that involved members of California-based Health Net who used out-of-network physicians. The suit alleged that members who received care from out-of-network doctors and healthcare facilities got less money than they should have because the health insurer used an “invalid” database to determine reimbursement amounts. Under the settlement, Health Net will pay $215 million to the plaintiffs and make another $40 million worth of business practice changes.

The suit involves about two million Health Net members in several states, and it could have a broader impact on the health insurance industry because the vast majority of the nation’s health insurers use Ingenix, the database in question, to set out-of-network payments. Ingenix is a subsidiary of UnitedHealth Group. The suit echoed many of the charges leveled by New York State Attorney General Andrew Cuomo when he called several health insurers, including UnitedHealth, Health Net, CIGNA, and Aetna, on the carpet in a probe into how they set out-of-network reimbursement rates. In the course of that investigation, Cuomo charged that the Ingenix database consistently distorted “reasonable and customary” charges to dramatically reduce payments for out-of-network services.