Health Net 2000 Annual Report Download - page 51

Notes to Consolidated Financial Statements HEALTH NET 49
United States District Court for the Southern District of
Florida in Miami.The Company has filed a motion to
dismiss the case. Briefing on the motion to dismiss has
been completed and the matter is currently pending
before the court. Preliminary discovery and briefing
regarding the plaintiff ’s motion for class certification has
also been completed and the matter is also pending
before the court.The Company intends to vigorously
defend the action.
On August 17, 2000, a complaint was filed in the
United States District Court for the Southern District of
Florida in a lawsuit entitled Shane v. Humana, Inc., et al.
(including Foundation Health Systems, Inc.).The com-
plaint seeks certification of a nationwide class action on
behalf of physicians and alleges that the defendant man-
aged care companies’methods of reimbursing physicians
violate provisions of RICO, ERISA, certain federal regu-
lations and various state laws.The action seeks unspeci-
fied damages and injunctive relief. On September 22,
2000, the Company filed a motion to dismiss, or in the
alternative to compel arbitration. On December 11, 2000,
the court granted in part and denied in part the
Company’s motion to compel arbitration. Under the
court’s order, the single named plaintiff to allege a direct
contractual relationship with the Company is compelled
to arbitrate his direct claims against the Company.The
Company intends to vigorously defend the action.
Physicians Health Services, Inc. (“PHS”), a subsidiary
of the Company, was sued on December 14, 1999 in the
United States District Court in Connecticut by the
Attorney General of Connecticut, Richard Blumenthal,
acting on behalf of a group of state residents.The lawsuit
was premised on ERISA, and alleged that PHS violated
its duties under that Act by managing its prescription
drug formulary in a manner that served its own financial
interest rather than those of plan beneficiaries.The suit
sought to have PHS revamp its formulary system, and to
provide patients with written denial notices and instruc-
tions on how to appeal. PHS filed a motion to dismiss
which asserted that the state residents the Attorney
General purported to represent all received a prescription
drug appropriate for their conditions and therefore suf-
fered no injuries whatsoever, that his office lacked stand-
ing to bring the suit and that the allegations failed to
state a claim under ERISA. On July 12, 2000, the court
granted PHS’motion and dismissed the action.The State
of Connecticut has filed an appeal.
Meanwhile, on September 7, 2000, the Attorney
General of Connecticut, Richard Blumenthal, filed
another lawsuit against Physicians Health Services of
Connecticut, Inc. (“PHS-CT”).This new suit also names
Foundation Health Systems, Inc.,Anthem Blue Cross and
Blue Shield of CT, Anthem Health Plans, Inc., CIGNA
Healthcare of CT, Inc., and Oxford Health Plans of CT,
Inc. as defendants, and asserts claims against PHS-CT and
the Company that are similar, if not identical, to those
asserted in the previous lawsuit that was dismissed on July
12, 2000. On November 30, 2000, the clerk of the
Judicial Panel on Multi-District Litigation entered an
order conditionally transferring this case to the United
States District Court for the Southern District of Florida
to be consolidated for pretrial proceedings only with the
other cases against managed care organizations pending in
that court.The clerk of the Judicial Panel on Multi-
District Litigation stayed the conditional transfer order on
December 15, 2000 pending briefing and argument con-
cerning whether transfer is appropriate.The Connecticut
District Court has stayed the case pending the outcome
of the Judicial Panel on Multi-District Litigation pro-
ceedings.The Company intends to vigorously defend
the action.
On September 7, 2000, a complaint was filed in the
United States District Court for the District of
Connecticut in a lawsuit entitled Albert v. CIGNA
Healthcare of Connecticut, Inc., et al. (including
Physicians Health Services of Connecticut, Inc. and
Foundation Health Systems, Inc.).The complaint seeks
certification of a nationwide class action and alleges that
the defendant managed care companies’ various practices
violate provisions of ERISA.The action seeks unspecified
damages and injunctive relief. On November 30, 2000,
the clerk of the Judicial Panel on Multi-District
Litigation entered an order conditionally transferring this
case to the United States District Court for the Southern
District of Florida to be consolidated for pretrial pro-
ceedings only with the other cases against managed care
organizations pending in that court.The clerk of the
Judicial Panel on Multi-District Litigation stayed the
conditional transfer order on December 15, 2000
pending briefing and argument concerning whether
transfer is appropriate.The plaintiff is objecting to
transfer. The Company intends to vigorously defend
the action.
In May 2000, the California Medical Association
filed a lawsuit, purportedly on behalf of its member
physicians, in the United States District Court for the
Northern District of California against several managed
care organizations, including the Company, entitled
California Medical Association v. Blue Cross of
California, Inc., PacifiCare Health Systems, Inc.,