A federal judge has warned a growing roster of plaintiffs lawyers in a multibillion-dollar health insurance class action not to muddy up the case with jockeying over fees.
U.S. District Judge Faith Hochberg wants the lawyers to coordinate discovery in suits alleging Aetna, Cigna, Oxford, WellPoint and Horizon Blue Cross of New Jersey underpaid claims for out-of-network treatments by relying on a database that deflated the usual, customary and reasonable reimbursements rates.
"I wasn't born yesterday," the judge said at an April 7 status conference in Newark attended by almost two dozen plaintiffs lawyers. "I understand everybody's interest in this room, and I'm not going to tolerate this becoming an attorney feeding frenzy for fees. My overriding principle will be to get this settled reasonably early, fairly, with the vast bulk of the proceeds going to the policyholders, not the attorneys."
The case has already been affected by a feud between two leading firms on the plaintiffs' side, Wilentz, Goldman & Spitzer in Woodbridge, N.J., and Pomerantz, Haudek, Block, Grossman & Gross in New York.
The plaintiffs firms appear to be taking to heart Hochberg's instruction to cooperate with each other. Lawyers said this week that they had decided on a division of labor but weren't ready to propose an order to the judge or say definitely which firms would take the lead.
Class action suits over the allegedly fraudulent database created by consulting company Ingenix and used by many carriers have already led to a $255 million settlement with HealthNet approved by Hochberg last year.
A $350 million proposed settlement also has been reached in federal court in Manhattan in a case against United Health Group. In addition, UHG has settled a complaint by the state of New York by agreeing to scrap the database and fund the creation of a new one by academic experts.
Meanwhile, similar cases are piling up before Hochberg.
At Aetna's request, the Multi-District Litigation Panel of the federal courts decided on April 8 to give Hochberg a class action case filed in Connecticut against Ingenix and Aetna to go along with cases already before her against Aetna, Cigna and Horizon.
Hochberg not only has experience from the HealthNet litigation, she made several rulings in that case that could apply to the current cases. She also is expected to receive cases against WellPoint that originated in California.
How many millions of insureds and providers are affected by the unresolved suits is not known, but the previous settlements are likely to point the way to a resolution with the latest batch of defendants.
Hochberg, noting that it took nine years to reach a proposed settlement in the UHG case in New York, said she wants to move the litigation as quickly as possible. To do that, she has to decide how to coordinate discovery efficiently without compromising the potentially diverse interests of the various insurers, providers, medical associations and subscribers.
A few days after appearing before Hochberg, plaintiffs lawyers gathered in a conference room at Newark's Gateway office complex to start the process.
Barbara Quackenbos of Wilentz Goldman and Brian Hufford of Pomerantz Haudek say there has been an agreement in principle among plaintiffs lawyers that discovery should proceed on two tracks. One would be for subscribers and one for providers and medical associations.
But they said they were not ready to propose a case management order. Still to be formalized is which firms would take the lead in each track. In addition, it hasn't been decided whether it would be feasible or enforceable to impose a ban to stop lawyers on one track from getting the jump on competing counsel by settling both tracks.
The interests of providers and subscribers are theoretically at odds because reimbursements by insurers are usually based on providers' representations but sometimes the payments are made directly to providers, sometimes to subscribers and sometimes to both.
Defense counsel, on the other hand, told Hochberg a single track system would be better than a parallel system for discovery. William Pratt of Kirkland & Ellis in New York described it at the status conference as "an artificial layer."
The only positive feature of two tracks would be the separation of plaintiffs attorneys who don't like each other, Pratt suggested.
"We very much recognize that there's tension among the different plaintiff firms, and that a two-track structure could provide a way to allocate responsibility among those firms," he said.
Wilentz Goldman and Pomerantz Haudek were allies in the seven-year-long HealthNet case, which generated a $68 million fee award and in the nine-year-long UHG case, which would generate fees up to $87 million if it receives final approval.
But the firms became enemies last year when they split over negotiations with UHG to settle all claims. Pomerantz Haudek eventually decided to make a separate peace with the insurer, and U.S. District Judge Lawrence McKenna is considering that settlement.
The American Medical Association, the lead plaintiff in the UHG case, has endorsed the pact.
But Wilentz Goldman, citing evidence that the damages were as much as $4 billion, argued there was insufficient proof that $350 million was a fair, reasonable and adequate recovery. The firm urged the judge to reject it. McKenna said on April 17 that he would have a decision soon, but did not say how soon.
The firms' fight has moved west of the Hudson River. Both firms represent plaintiffs in Ingenix cases in New Jersey, and Wilentz Goldman has asked for an appointment as interim lead counsel.
But in February, a team of firms that included Pomerantz Haudek but not Wilentz Goldman filed suits with nearly identical claims on behalf of several state medical societies and the AMA. Pomerantz asked Hochberg to put Wilentz Goldman's interim lead counsel application on hold, because the firms, "unfortunately had a falling out due to irreconcilable differences over how the cases should be prosecuted."
On Tuesday, another firm made a stab at ascendancy, at least over part of the case.
Scott & Scott in New York had been appointed interim class counsel in the litigation in federal court in New Haven that was transferred to Hochberg by the MDL panel. Now the firm has applied to Hochberg to be interim class counsel for all the Aetna cases she is hearing.
The firm says it has already moved forward with discovery and has the qualifications and willingness to lead the plaintiffs' efforts.
"In fact, Scott & Scott is the only firm to have taken any depositions in the Aetna actions and advanced the case in a meaningful way," the firm said in a brief.
It remains to be seen whether that filing fits in with Hochberg's suggestion that she is more interested in how the case is to be managed than by whom.
"There's only one issue here as far as I'm concerned, and that's how to organize this matter and for everyone to remember that this is not a feeding frenzy for lawyers and it will not be, as long as it's in my courtroom," she said.