Health Net 2003 Annual Report Download - page 32

On September 26, 2002, the Court denied the motion for class certification in the lead action against us in the
subscriber track. In the interest of avoiding the further expense and burden of continued litigation, we resolved all three
actions which had sought nationwide class certification for immaterial amounts ($5,000 in the aggregate), and the actions
have been dismissed with prejudice, with no admission of liability. As a result of these settlements, the Romero and Pay
actions were dismissed with prejudice on March 28, 2003 and the Albert action was dismissed with prejudice on July 22,
2003, all with no admission of liability.
On September 19, 2003, the Court dismissed the fourth and final subscriber track action involving us, The State of
Connecticut v. Physicians Health Services of Connecticut, Inc. (filed in the District of Connecticut on September 7, 2000),
on grounds that the State of Connecticut lacks standing to bring the ERISA claims asserted in the complaint. That same
day, the Court ordered that the subscriber track is closed “in light of the dismissal of all cases in the Subscriber Track.”
The State of Connecticut has appealed the dismissal order to the Eleventh Circuit Court of Appeals.
Provider Track
The provider track includes the following actions involving us: Shane v. Humana, Inc., et al. (including Health Net,
Inc.) (filed in the Southern District of Florida on August 17, 2000 as an amendment to a suit filed in the Western District
of Kentucky), 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), Lynch v. Physicians Health Services of Connecticut, Inc. (filed in Connecticut state court on February
14, 2001), Sutter v. Health Net of the Northeast, Inc. (D. N.J.) (filed in New Jersey state court on April 26, 2002), Medical
Society of New Jersey v. Health Net, Inc., et al., (D. N.J.) (filed in New Jersey state court on May 8, 2002), Knecht v.
Cigna, et al. (including Health Net, Inc.) (filed in the District of Oregon in May 2003) and Solomon v. Cigna, et. Al.
(including Health Net, Inc.) (filed in the Southern District of Florida on October 17, 2003).
On March 2, 2001, the District Court for the Southern District of Florida issued an order in the lead provider action
(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 the lead provider action, which 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 under the federal
Racketeer Influenced and Corrupt Organizations Act (RICO), ERISA and various state laws, 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.
On September 26, 2002, the Court granted plaintiffs’ motion for class certification 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. The court has referred the case to mediation and has entered a scheduling order with a trial date set
for September 2004. Discovery is ongoing in the case.
On November 20, 2002, the Eleventh Circuit granted the defendants’ petition for review of the district court’s
certification decision. Oral argument on defendants’ appeal of the class certification decision took place before the
Eleventh Circuit on September 11, 2003.
On August 21, 2003, the District Court ordered that “[a]ll Provider Track tag-along cases are hereby stayed until ten
calendar days after the Court issues its omnibus opinions on the Main Track motions to compel arbitration and motions to
dismiss. At such time, the Court will set briefing schedules for all tag-along motions to compel arbitration and motions to
dismiss.”
On September 15, 2003, the District Court entered an order in the lead action granting in part and denying in part the
defendants’ motions to compel arbitration. In this order, the Court ruled that certain claims must be arbitrated and that
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