Health Net 2002 Annual Report Download - page 80

78 | HEALTH NET, INC.
On September 26, 2002, the Court granted plaintiffs’
motion for class certification, initially scheduled trial to
begin in May 2003, and granted plaintiffs’ request for
leave to amend their complaint. The new complaint adds
another managed care company as a defendant, adds the
Florida Medical Society and the Louisiana Medical Society
as plaintiffs, withdraws Dennis Breen as a named plaintiff,
and adds claims under the New Jersey Consumer Fraud
Act and the Connecticut Unfair Trade Practices Act against
defendants other than Health Net. On October 1, 2002,
the Court issued an order referring the lead provider track
case to mediation. On October 10, 2002, the defendants
filed a petition requesting that the 11th Circuit review the
district court’s order granting class status. That same day,
the defendants also filed a motion requesting that the
district court stay discovery pending ruling on the appeal
by the 11th Circuit, and pending ruling by the district
court on the defendants’ motion to dismiss and motions to
compel arbitration. On October 15, 2002, the United
States Supreme Court agreed to review a portion of the
11th Circuit’s decision to affirm the district court’s arbitra-
tion order. On October 25, 2002, Health Net requested
that the district court stay discovery against it pending
ruling by the Supreme Court on arbitration issues. The
district court later denied this request. On October 18,
2002, the defendants filed a motion to dismiss the plain-
tiffs’ amended complaint. On November 6, 2002, the
district court denied the defendants’ October 10, 2002
motion requesting a stay of discovery. On November 26,
2002, the plaintiffs filed a motion with the district court
seeking leave to amend their complaint, which motion was
denied. The district court has moved the trial date from
May to December 2003.
On November 20, 2002, the 11th Circuit granted the
defendants’ petition for review of the district court’s certifi-
cation decision. On December 2, 2002, the defendants
filed a motion with the 11th Circuit requesting that it stay
discovery pending resolution of the class certification
appeal. The 11th Circuit denied this motion. On December
30, 2002, defendants filed their brief with the 11th Circuit
seeking reversal of the district court’s grant of class status.
The CMA action alleges violations of RICO, certain
federal regulations and the California Business and
Professions Code and seeks declaratory and injunctive
relief, as well as costs and attorneys’ fees. As set forth
above, on March 26, 2001, the California Medical
Association was named as an additional plaintiff in the
consolidated amended complaint filed in the Shane action.
The Klay suit is a purported class action allegedly
brought on behalf of individual physicians in California
who provided health care services to members of the
defendants’ health plans. The complaint alleges violations
of RICO, ERISA, certain federal regulations, the California
Business and Professions Code and certain state common
law doctrines, and seeks declaratory and injunctive relief,
and damages. As set forth above, on March 26, 2001,
Leonard Klay was named as an additional plaintiff in the
consolidated amended complaint filed in the Shane action.
The CSMS case was originally brought in Connecticut
state court against Physicians Health Services of
Connecticut, Inc. (PHS-CT) alleging violations of the
Connecticut Unfair Trade Practices Act. The complaint
alleges that PHS-CT engaged in conduct that was designed
to delay, deny, impede and reduce lawful reimbursement to
physicians who rendered medically necessary health care
services to PHS-CT health plan members. The complaint,
which is similar to others filed against us and other
managed care companies, seeks declaratory and injunctive
relief. On March 13, 2001, the Company removed this
action to federal court. Before this case was transferred to
MDL 1334, the plaintiffs moved to remand the action to
state court and the federal District Court of Connecticut
consolidated this action and Lynch v. Physicians Health
Services of Connecticut, Inc., along with similar actions
against Aetna, CIGNA and Anthem, into one case entitled
CSMS v. Aetna Health Plans of Southern New England, et
al. PHS-CT has not yet responded to the complaint.
The Lynch case was also originally filed in Connecticut
state court. This case was purportedly brought on behalf of
physician members of the Connecticut State Medical
Society who provide health care services to PHS-CT health
plan members pursuant to provider service contracts. The
complaint alleges that PHS-CT engaged in improper, unfair
and deceptive practices by denying, impeding and/or
delaying lawful reimbursement to physicians. The
complaint, similar to the complaint referred to above filed
against PHS-CT on the same day by the Connecticut State
Medical Society, seeks declaratory and injunctive relief and
damages. On March 13, 2001, we removed this action to
federal court. Before this case was transferred to MDL
1334, the plaintiffs moved to remand the action to state
court and the federal District Court of Connecticut consol-
idated this action and CSMS v. Physicians Health Services
of Connecticut, Inc., along with similar actions against
Aetna, CIGNA and Anthem, into one case entitled CSMS
v. Aetna Health Plans of Southern New England, et al.
PHS-CT has not yet responded to the complaint.