Suit Claims Aetna’s Deals With Doctors Harm HMO Patients

In the first class-action suit of its kind in California, Aetna Inc., one of the nation’s largest managed health care providers, was accused Thursday of failing to disclose confidential arrangements with physicians that were injurious to members of the health plan.

The lawsuit, filed in Contra Costa County Superior Court, charges that under the contracts, doctors were barred from disclosing information to patients about monetary incentives based on providing less care.

“Many doctors are fed up with the HMO [health maintenance organization] system, which interferes with the ability to deliver quality health care,” said San Francisco attorney Frederick P. Furth, the lead lawyer for the plaintiffs. “We believe they will fully support this lawsuit.”

Calls to several Aetna representatives seeking comment Thursday night were not returned. In response recently to lawsuits elsewhere targeting physician payment arrangements, Aetna issued a statement saying its companies’ “general practice is to provide full disclosure to potential members on how our health plans operate including how physicians are paid and we encourage participating physicians to discuss their financial arrangements with their patients.”

The suit, like class actions filed recently in other states against health maintenance organizations, attacks some of the basic tenets of managed care.

The suit specifically contends that Aetna’s payment system to doctors is harmful to patients and contains hidden elements. Aetna, like other HMOs, pays doctors a set amount per patient for providing all the care that person needs.

Consequently, the suit alleges, a primary care physician “has significant financial incentive to give little or no medical services to each Aetna patient since the amount paid to him/her remains the same, regardless of the amount of care the patient receives.”

“This financial incentive to reduce patient care . . . is exacerbated by Aetna’s policy of paying financial bonuses to [primary care physicians], based on their ability to keep costs down,” the suit says.

The suit also contends that the undisclosed financial incentives reward those primary care doctors who keep medical treatment to a minimum while penalizing those doctors who provide a full range of care.

Moreover, the suit contends that these financial arrangements force the primary care physicians into inherent conflicts of interest that prevent them “from making medical decisions unsullied by financial concerns.”

Thursday’s suit, filed under the California Business and Professions Code, was the first of what is expected to be a wave of major suits against HMOs in California.

Indeed, Furth said the legal team that filed the case plans to file additional suits in California, perhaps as soon as the next few weeks.

Joining Furth in filing the case were law firms headed by Richard Scruggs of Pascagoula, Miss., and Ronald Motley of Charleston, S.C. Both firms played instrumental roles in the assault state attorneys general waged against the tobacco industry in recent years.

Those firms have won hundreds of millions of dollars in fees from groundbreaking tobacco litigation, providing a large war chest to wage a protracted court battle if necessary. They were joined Thursday by six firms from Texas, several of which also were involved in tobacco suits, four other firms from Mississippi, and one from Maryland.

The suit asks that Aetna be required to surrender “all of their ill-gotten gains and monies wrongfully acquired by means of any acts of unfair competition . . . and/or any acts of unlawful advertising.”

According to the suit, Aetna has engaged in an “advertising scheme that is fraudulent, unfair, misleading and deceptive” to consumers.

The suit also seeks an order enjoining Aetna and its officials from engaging in these kinds of illegal acts in the future.

The lawsuit was filed by Jeanne E. Curtright, a self-employed San Diego resident and Aetna member since 1997, on behalf of 1.4 million Aetna enrollees in California.

In addition to Hartford, Conn.-based Aetna Inc., the other defendants are Aetna-U.S. Healthcare Inc., based in Pennsylvania, and Aetna U.S. Healthcare of California Inc.