Report From the States

California Medical Association Files Class-Action Lawsuit

Karen Nikos

The California Medical Association (CMA) has filed a federal lawsuit against the three largest for-profit national health plans in California for imposing unfair contract terms, unnecessarily denying and delaying payments for procedures patients need, and reimbursing physicians at rates that are insufficient to cover costs.

The suit, in U.S. District Court in San Francisco, was filed under the civil RICO (Racketeer Influenced and Corrupt Organization Act) laws. The suit (California Medical Association v. California Blue Cross et al.) claims that California physicians have had their business damaged and their patients victimized because of racketeering activity executed by these health plans --- California Blue Cross, HealthNet and PacifiCare. CMA is seeking injunctive relief. The health plans used coercive, unfair and fraudulent means to dominate and control patient-physician relationships for their own financial gain, but to the detriment of both patients and physicians, the suit further states.

CMA President Marie Kuffner, M.D., said the lawsuit is one of the final steps in what has been an excruciating and lengthy effort to get the health plans to give physicians the means to care for their patients. "It is with sadness that we are forced to this last resort," said Dr. Kuffner, a UCLA professor of anesthesiology.

More than nine million Californians, or about two-thirds of those covered by for-profit plans in the state, are insured by the defendant plans. The plans had no intention of keeping their promise to provide access to quality care at a reasonable cost. Instead, these companies have conspired to generate profits for themselves while delaying payments to doctors, denying necessary and timely care to patients, and refusing to provide the data necessary for physicians to treat their patients, hence committing fraud on both physicians and patients, the suit states.

"CMA's role as plaintiff shows how critical the health care problem is in the nation, particularly in California, where 21 million people belong to a managed care health plan of some kind," said Archie Lamb, a Birmingham, Alabama attorney who filed the suit on CMA's behalf.

Lamb already has filed a lawsuit against Aetna, Cigna, Humana and Prudential in the Northern District Court of Alabama on behalf of physicians seeking national class certification.

"It is ironic that here in the state where the HMO concept was born, the abuses of managed care are most egregious. The for-profit insurance industry-owned HMOs have engaged in a scheme that included lying to employers about the benefits for employees, lying to physicians about commitment to payment for quality health care and fraudulently induced patients that they would be there in the time of greatest need. And so, we start here in California and will take this fight all the way to the East Coast, until patients can once again trust that their doctor can provide them with the care they need, free of interference by companies driven only by greed," Lamb said.

The California Medical Association represents 30,000 physicians from all practices and medical specialties. A copy of the lawsuit is available at, under the "news" heading.

Ms. Nikos is public relations counsel for the California Medical Association, (213) 630-1139.

Originally published in the Medical Sentinel 2000;5(5);179. Copyright©2000 Association of American Physicians and Surgeons (AAPS)