Most reimbursement health insurance policies provide that out of network insurance benefits are to be based on whichever of the following amounts is lowest: (i) the physician's actual charge; (ii) the physician's usual charge; or (iii) the "reasonable and customary charge" for the services. The "reasonable and customary charge" is often defined as "the usual charge of other doctors or other providers of similar training or experience in the same or similar geographic area for the same or similar service or supply." This payment scheme is commonly called "usual, customary and reasonable" or UCR. The insurance company determines the reasonable and customary portion of the UCR charge, supposedly based on information available to it but not to the general public.
This suit, which was filed on March 15, 2000, alleges that UHC's subsidiary, Ingenix Corp., developed a database to determine UCR, but the database was derived from unreliable and insufficient data. The plaintiffs assert that the reasonable and customary charges for certain procedures are substantially higher than the insurance companies allow.
The AMA, the Medical Society of the State of New York, the Missouri State Medical Association, individual physicians and subscribers/beneficiaries are named plaintiffs. Several unions of New York State employees have also joined the case as additional plaintiffs. The suit alleges that the plaintiffs are representatives of a large class of physicians, subscribers, and beneficiaries.
Based largely on information provided by the plaintiffs in this lawsuit, the New York Attorney General undertook an investigation into the use by insurers of defective databases when determining "usual, customary and reasonable" payments made to out of network healthcare providers. On January 13, 2009, the New York Attorney General announced that, as a result of his investigation, UHC would discontinue its defective database. UHC paid $50 million to a not-for-profit corporation, which will develop a replacement for the Ingenix database. Other insurance companies also contributed to this effort, so that the total amount paid is nearly $100 million. Based largely on this same information, the United States Senate Committee on Commerce, Science, and Transportation issued its own report decrying widespread deceptive practices in the health insurance industry.
On October 23, 2009, the New York Attorney General designated a coalition of universities in New York State, led by Syracuse University, to develop the replacement database. The data and methodology in the new database are to be accessible to the general public. Thus, the new database is to be more transparent than the old one, and it should be free from conflicts of interest.
On January 14, 2009, United signed a settlement agreement with several of the plaintiffs in the AMA/MSSNY lawsuit, including the three medical societies. Under the settlement, United will be paying the plaintiff class $350 million. The trial court granted preliminary approval of the settlement, but some members of the plaintiff class objected to it as inadequate. They are seeking to appeal the class certification.
On January 4, 2010, the trial court conditionally certified the plaintiff class and established an agenda for the remaining proceedings in the trial court. Notice and claim forms are to be mailed to indentifiable class members by May 28, 2010, the notice is to be published by June 4, 2010, and class members are to have until May 22, 2010 to opt out of the class. A final hearing to approve the settlement is scheduled for September 13, 2010.