National Class-Action Filed Against Prudential Health Care

NEW YORK, April 13 /PRNewswire/ via NewsEdge Corporation -

A federal class-action lawsuit filed this week against Prudential Insurance and its healthcare subsidiaries may affect several million people across the U.S. who are participants in, or beneficiaries of, Prudential employee welfare benefit plans.

The action was filed Tuesday, April 11, 2000, in the United States District Court, District of New Jersey, by two of the preeminent plaintiff class action law firms, Pomerantz Haudek Block Grossman & Gross LLP and Milberg Weiss Bershad Hynes & Lerach LLP, against the Prudential Insurance Company of America and the Prudential Health Care subsidiaries (collectively, "PruCare"). It was filed on behalf of a proposed class of all participants or beneficiaries in employee benefit plans who have received their health insurance through PruCare. In August 1999, Aetna, Inc. acquired Prudential's health care business.

The case alleges, among other things, that PruCare breached the express terms of its health care plans by using procedures for determining whether proposed care is "medically necessary" that are inconsistent or conflict with generally accepted medical standards. In particular, plaintiffs claim that PruCare improperly permits non-physicians or physicians who are not qualified in the appropriate specialty to make denials of care based on medical necessity and, further, that in making such decisions PruCare relies on actuarial guidelines developed by Milliman & Robertson, Inc., when such guidelines do not reflect accepted standards within the medical community.

Just this week, Aetna U.S. Healthcare, Inc., Aetna U.S. Healthcare of North Texas, Inc. and Prudential Health Care Plan, Inc. jointly submitted with the Attorney General of the State of Texas a proposed settlement of a case brought by the State of Texas on behalf of its residents. Among other things, Aetna agreed that "the determination of medically necessary care is an analytical process that will be applied by Aetna on a case-by-case basis by qualified professionals who have the appropriate training, education, and experience and who possess the clinical judgment and case-specific information necessary to make these decisions."

In the recently filed Prudential action, plaintiffs allege that their contracts require PruCare to follow this standard and that it has failed to do so. The plaintiffs seek to compel PruCare to comply with its contractual obligations on a nationwide basis, as Aetna has now agreed to do in Texas.

In the settlement, Aetna also agreed that any non-case specific guidelines or policies it uses to determine medical necessity will be publicly disclosed and made available for peer review, to the extent permissible by applicable law or relevant contracts. In the PruCare complaint, the plaintiffs allege that PruCare relies on the Milliman & Robertson guidelines, which have neither been disclosed nor been made available for peer review. To the extent such guidelines are protected from disclosure by contract, they would not be required to be disclosed under the proposed settlement. In the Prudential action, plaintiffs allege that reliance on the Milliman & Robertson guidelines for determining medical necessity is improper, and seek to compel Prudential Healthcare to alter its decision-making process.

Pomerantz Haudek Block Grossman & Gross LLP (http://www.pomerantzlaw.com), one of the first firms involved in managed care litigation, won a significant decision against Healthsource in 1997 involving the rights of patients under ERISA. The firm recently filed an action on behalf of the American Medical Association and the Medical Society of the State of New York attacking reductions in reimbursements to providers and patients based on improper determinations of usual, customary and reasonable rates.

Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz firm pioneered the field of securities class actions and has recovered numerous multimillion-dollar damages awards on behalf of class members in securities, antitrust and consumer litigation. The firm has offices in New York and Chicago.

Milberg Weiss Bershad Hynes & Lerach LLP (http://www.milberg.com), a 145-lawyer firm with offices in New York, San Diego, San Francisco, Los Angeles and Boca Raton, has been actively engaged in commercial litigation, emphasizing securities, consumer, insurance, healthcare, human rights and antitrust class actions, for more than 30 years. The firm's reputation for excellence has been recognized on repeated occasions by courts that have appointed it to major positions in complex multi-district or consolidated litigations. Milberg Weiss has taken a lead role in numerous complex litigations on behalf of defrauded investors, consumers and companies, as well as victims of World War II human rights violations, and has been responsible for more than $20 billion in recoveries.

Milberg Weiss was one of the first law firms in the nation to bring large-scale actions in both federal and state courts challenging managed care organizations' use of undisclosed policies on a plan-wide basis.