By Lewis Krauskopf
NEW YORK Jan 15 UnitedHealth Group Inc (UNH.N)
agreed on Thursday to pay $350 million to resolve class action
lawsuits over reimbursing patients for out-of-network medical
The settlement comes two days after UnitedHealth struck an
agreement with the New York state attorney general following a
probe into the independence of the company database used to set
reimbursement rates for patients' medical bills.
Attorney General Andrew Cuomo also reached agreement on
Thursday with another health insurer, Aetna Inc (AET.N), which
will pay $20 million to help establish an independent database
used for calculating rates.
Aetna's payment adds to the $50 million UnitedHealth agreed
to pay earlier this week to fund the database. UnitedHealth is
also shutting its Ingenix medical billing information service,
which has been at the center of the probe.
UnitedHealth's $350 million settlement resolves litigation
filed on behalf of the American Medical Association, health
plan members, healthcare providers and state medical
It will fund the settlement for health plan members and
out-of-network providers in connection with procedures
performed since 1994. UnitedHealth, which did not admit
wrongdoing, will be released from claims relating to its
out-of-network reimbursement policies dating back to 1994.
Other health insurers also face similar class action
"This scam cost consumers hundreds of millions of dollars,"
Cuomo said during a news conference on Thursday.
The UnitedHealth settlement involves three federal class
action suits the company is seeking to have consolidated in the
Southern District of New York. The settlement is subject to
UnitedHealth, the largest U.S. health insurer by market
value, said it would pay for this settlement with cash on hand,
with the accrual included in its results for the fourth quarter
A probe by Cuomo, announced last February, found that
UnitedHealth's Ingenix unit operates a "defective and
manipulative" database that most major health insurers use to
set reimbursement rates for out-of-network medical expenses.
Insurers often promise to cover up to 80 percent of the so-
called "usual and customary" rate of an out-of-network expense,
with consumers responsible for paying the balance. The Ingenix
database would skew these rates downward compared with the
actual market rate, shortchanging consumers, Cuomo said.
"By using a flawed database to determine reimbursement
rates for out-of-network care, insurers have increased profits
at the expense of patients and physicians," AMA President
Nancy Nielsen said in a statement.
Cuomo has also said his office would approach other health
insurers about using the new database and contributing money to
UnitedHealth shares were down 13 cents at $23.95 at midday
on the New York Stock Exchange. Aetna shares were down $1.03
cents, or 4 percent, at $25.08.
(Editing by Lisa Von Ahn and Andre Grenon)