Unions Announce Record Settlement Against Health Care Insurer

ALBANY, NY (01/15/2009)(readMedia)-- In a major victory for working New Yorkers, CSEA President Danny Donohue today applauded a $350 million settlement against UnitedHealth Care ("United") for a scheme to defraud them by manipulating reimbursement rates.

CSEA was among the plaintiffs in a class action lawsuit against "United" which is the nation's second largest health insurer. It is the largest cash settlement ever in the history of health care litigation.

CSEA President Danny Donohue noted, "This is a historic milestone that will have long-term benefits for the health care industry."

The plaintiffs contended "United" set inacurate reimbursement rates for "usual and customary" charges for medical services. This resulted in consumers paying higher rates for their share of expenses when using out-of-network health care.

Excess fees were able to be fraudulently calculated because the company which determined the rates was owned by "United."

Under the settlement, a claims process will be implemented for consumers to recover the excess fees.

Earlier in the week, Attorney General Andrew Cuomo announced, in connection with his own separate investigation, that his office negotiated a $50 million "United" fund to hire a qualified nonprofit organization which will establish a new, independent database to determine fair out-of-network reimbursement rates for consumers. He later announced that Aetna, the nation's third largest health insurer, would also set aside $20 million to fund a new database.

Various other organizations, including NYSUT, the American Medical Association, the Medical Society of the State of New York, the New York State Police Investigators Association and the Organization of New York State Management/Confidential Employees were also plaintiffs in the case.

The settlement will now go to the U.S. District Court for the Southern District of New York for approval. Given its terms, union officials are optimistic of approval.

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