Health Net 2001 Annual Report Download - page 31

third amended complaint in Romero. The court dismissed all claims against us except one ERISA claim.
The court further ordered that plaintiffs may file amended complaints no later than March 20, 2002,
but that no new plaintiffs or claims will be permitted without prior leave of the court. Both plaintiffs
and defendants have filed motions for reconsideration relating to various parts of the court’s dismissal
order.
Provider Track
The provider track includes the following actions involving us: Shane v. Humana, Inc., et al.
(including Foundation Health Systems, Inc.) (filed in the Southern District of Florida on August 17,
2000 as an amendment to a suit filed in the Southern District of Mississippi), California Medical
Association v. Blue Cross of California, Inc., PacifiCare Health Systems, Inc., PacifiCare Operations, Inc.
and Foundation Health Systems, Inc. (filed in the Northern District of California in May 2000), Klay v.
Prudential Ins. Co. of America, et al. (including Foundation Health Systems, Inc.) (filed in the Southern
District of Florida on February 22, 2001 as an amendment to a case filed in the Northern District of
California), Connecticut State Medical Society v. Physicians Health Services of Connecticut, Inc. (filed in
Connecticut state court on February 14, 2001), and Lynch v. Physicians Health Services of
Connecticut, Inc. (filed in Connecticut state court on February 14, 2001).
On August 17, 2000, a complaint was filed in the United States District Court for the Southern
District of Florida in Shane, the lead provider track action in MDL 1334. The complaint seeks
certification of a nationwide class action on behalf of physicians and alleges that the defendant
managed care companies’ methods of reimbursing physicians violate provisions of RICO, ERISA,
certain federal regulations and various state laws. The action seeks unspecified damages and injunctive
relief.
On September 22, 2000, we filed a motion to dismiss, or in the alternative to compel arbitration, in
Shane. On December 11, 2000, the court granted in part and denied in part our motion to compel
arbitration. Under the court’s December arbitration order, plaintiff Dennis Breen, the single named
plaintiff to allege a direct contractual relationship with us in the August complaint, was compelled to
arbitrate his direct claims against us. We filed an appeal in the United States Court of Appeals for the
11th Circuit seeking to overturn the portion of the district court’s December ruling that did not order
certain claims to arbitration. On April 26, 2001, the court modified its December arbitration order and
is now retaining jurisdiction over certain direct claims of plaintiff Breen relating to a single contract.
On March 2, 2001, the District Court for the Southern District of Florida issued an order in Shane
granting the dismissal of certain claims with prejudice and the dismissal of certain other claims without
prejudice, and denying the dismissal of certain claims.
On March 26, 2001, a consolidated amended complaint was filed in Shane against managed care
companies, including us. This consolidated complaint adds new plaintiffs, including Leonard Klay and
the California Medical Association (who, as set forth below, had previously filed claims against the
Company), and has, in addition to revising the pleadings of the original claims, added a claim under
the California Business and Professions Code. On May 1, 2001, we filed a motion to compel arbitration
in Shane of the claims of all individual plaintiffs that allege to have treated persons insured by us. On
that same date, we filed a motion to dismiss this action. Preliminary discovery and briefing regarding
the plaintiffs’ motion for class certification has taken place. On May 7, 2001, the court heard oral
argument on class certification issues in Shane. On May 9, 2001, the court entered a scheduling order
permitting further discovery. On May 14, 2001, Health Net joined in a motion for stay of proceedings
in Shane v. Humana, Inc., et al. (including Foundation Health Systems, Inc.) (00-1334-MD) in the
United States District Court for the Southern District of Florida pending appeal in the 11th Circuit
Court of Appeals. On June 17, 2001, the district court stayed discovery until after the district court
rules upon motions to dismiss and motions to compel arbitration. This order staying discovery also
applies to other actions transferred to the district court by the Judicial Panel on Multidistrict Litigation,
namely California Medical Association v. Blue Cross of California, Inc. et al., Klay v. Prudential Ins. Co. of
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