Court Dismisses Challenges to Cigna’s Settlement With Doctors

A federal appeals court dismissed challenges to a $540-million settlement between Cigna Corp. and thousands of doctors who claimed the health insurer systematically underpaid them.

The bulk of the nation’s doctors, some 700,000, have signed on to a massive racketeering lawsuit against the managed-care industry, charging the insurers with breaching contract terms by shortchanging them on payments and curtailing necessary patient care.

Philadelphia-based Cigna won approval for its settlement in February. But a small group of doctors disagreed with the settlement and attempted to derail the deal through the courts.

Cigna said the dismissal of those appeals cleared the way for implementation of the settlement, which would end Cigna’s part in the lawsuits filed by doctors in the late 1990s.

Under the settlement, Cigna agreed to spend $400 million to improve its billing systems and pay about $70 million to doctors in addition to $55 million in attorneys’ fees.

The insurer also agreed to spend $15 million to create a healthcare foundation and to establish an advisory committee.

A spokesman for Cigna could not be reached for comment.

Cigna was the second major managed-care company to reach a deal in the massive lawsuit. Last May, Aetna Inc. and the doctors settled for $470 million.

A trial for the remaining defendants has been set for June in Miami. They include Humana Health Plan, PacifiCare Health Systems, Prudential Insurance Co. of America, United HealthCare, WellPoint Health Networks and Foundation Health Systems.