On December 1, 2009, Judge Lawrence M. McKenna of the Southern District of New York entered an order granting preliminary approval of an historic $350 million class action settlement with UnitedHealth Group, resolving a nearly decades-long challenge to its practices involving reimbursement for health care services by out-of-network providers. Judge McKenna granted preliminary approval of the settlement, which had been proposed by co-lead counsel Pomerantz Haudek Grossman & Gross LLP over the objections filed by other counsel who had been involved in the litigation.  After providing some 10 days of hearings and months of discovery to the objectors, Judge McKenna rejected any grounds for opposition, finding them not to be persuasive. In issuing its order, the Court further appointed Pomerantz as settlement lead counsel, finding that it was "plainly qualified, experienced and able to conduct the litigation." 

"We are grateful that the Judge recognized how valuable this settlement truly is, especially when balanced against the risks facing the plaintiffs were they to continue litigating in the years ahead," says Pomerantz partner D. Brian Hufford, who has overseen the litigation from its inception. "We believe that the $350 million settlement, which will grow to more than $362 million after guaranteed interest is added, represents the largest single health care settlement ever reached, and is something to be proud of," he adds.

In the action, Pomerantz represented not only a number of health care subscribers and providers, but also various medical associations and New York State-based unions which supported the settlement. The medical associations included the American Medical Association, the Medical Society of the State of New York and the Missouri State Medical Association, while the union plaintiffs including the Civil Service Employees Association, New York State Police Investigators Association, New York State United Teachers, and the Organization of New York State Management/ Confidential Employees.

The settlement was negotiated in conjunction with an investigation by New York Attorney General Andrew Cuomo, prompted by the class litigation, into UnitedHealth's use of its Ingenix database to determine usual, customary and reasonable ("UCR") rates for out-of-network services. Attorney General Cuomo announced on October 27, 2009, the implementation of the terms of a parallel settlement with UnitedHealth. In that settlement, which was incorporated into the class settlement -- thereby making it judicially enforceable by the federal court -- UnitedHealth agreed to pay $50 million toward the creation of a new UCR database. It will be run by a newly created not-for-profit company working with a research center headed by Syracuse University.

"With preliminary approval, the next step will be notifying class members of the settlement, to be followed by a hearing before Judge McKenna on final approval," says Pomerantz partner Robert J. Axelrod, who has worked jointly with Mr. Hufford in prosecuting the litigation.

Pomerantz is continuing to litigate similar actions against other insurers. Judge Faith Hochberg of the District of New Jersey appointed Pomerantz as Chair of the Plaintiffs' Executive Committee in a comparable action against Aetna, and Pomerantz has also been designated as co-lead counsel on behalf of providers in litigations pending against CIGNA and Wellpoint in New Jersey and California, respectively. Pomerantz was also co-lead counsel in a similar case against Health Net, which settled before Judge Hochberg last year, with an estimated value of approximately $250 million.

For further information concerning the settlement, please contact Mr. Hufford at 212.661.1100, or dbhufford@pomlaw.com



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