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Scruggs has HMOs in cross-hairs

HATTIESBURG – Richard Scruggs, the Pascagoula attorney who took on Big Tobacco and won, received criticism for the amount of fees he received from the tobacco companies. He pledged that he would use his winnings to help fund lawsuits to help the little guy who wouldn’t otherwise be able to seek legal remedies.

Scruggs said he is now making good on that promise by participating in a class-action lawsuit against Aetna, one of the nation’s largest health maintenance organizations (HMOs). Scruggs says that, like the tobacco companies, Aetna is having a major negative impact on the health of Americans.

Scruggs and other attorneys who are part of a group called the REPAIR Team representing plaintiffs across the country have filed a lawsuit in U.S. District Court in Hattiesburg against Aetna. The lawsuit accuses Aetna of violating the Racketeer Influenced and Corrupt Organization Act (RICO) and the Employee Retirement Income Security Act (ERISA) by engaging in an unlawful conspiracy to deprive patients of services.

“This is a challenge that is as big as the tobacco challenge in the sense that HMOs have created a system nationwide that is not providing the health care that people are paying for,” Scruggs said in an interview with the Mississippi Business Journal. “This isn’t litigation that I sought out. In fact, I was tired from the five-year tobacco war. I was constantly getting calls from physicians and patients around the country with absolute horror stories as to how they were being treated by their HMO, particularly Aetna. The calls finally rose to the level both in frequency and intensity that I just couldn’t ignore it anymore.”

In a statement released to the media, Aetna said that similar lawsuits recently have been dismissed.

“The accusations put forward in the lawsuit are equally outrageous to those that were recently dismissed by two different judges in two separate lawsuits (Joseph Maio, et al. vs. Aetna Inc., et al. and Mary Ellen Ehlmann, et al. vs. Kaiser Foundation Health Plan, individually and d/b/a “Kaiser Permanente,” et al),” Aetna said. “We intend to vigorously defend this case as we did the previous suits. Aetna U.S. Healthcare is committed to providing access to quality health care to its members.

“But these attacks go beyond Aetna. They are attacks on the managed care system, which has reduced the rise of medical costs, increased preventive care and made quality health care affordable to more people. Aetna U.S. Healthcare’s general practice is to provide full disclosure to potential members on how our health plans operate including how physicians are paid. We encourage participating physicians to discuss their financial arrangements with their patients.”

Some pro-HMO sources said the lawsuit has the potential for raising health care costs for all Americans. Scruggs said the lawsuit won’t increase costs for all medical care.

Physicians are often not fans of trial lawyers because of malpractice lawsuits. But this may be a case where the interests of doctors will be allied with the trial lawyers.

“In this case, we have a good coalition working with doctors just as we had a good coalition with doctors on the tobacco lawsuit,” Scruggs said. “Honest doctors are the ones who are objecting most vehemently to HMOs.

“There are a variety of concerns from doctors including inadequate payments. Doctors are concerned they are being hamstrung in providing the care they believe the patient ought to get. And they don’t like having their own economic interests threatened by the HMOs.”

Scruggs said before the advent of HMOs, it could be argued that doctors were rewarded for overtreating patients.

“Under the HMO system, it is just the opposite,” he said. “You would never hire a lawyer who made more if he lost your case than if he won it. The same is true with a doctor. Yet doctors in many of the HMO settings get paid more to treat you less.”

There have been fears in the business community that the successful tobacco litigation would open a floodgate of lawsuits against other industries. Those concerns have been heightened with the lawsuit against Aetna. Scruggs said the “floodgate theory” fears are unfounded.

“The message I would have for your readership is this is not an instance of trial lawyers seeking out an industry, and targeting an industry,” Scruggs said. “The motive for this litigation is coming from the consumers and not the lawyers. That industries other than HMOs and tobacco companies should fear this kind of legal assault is not well founded. When you are adversely affecting the health of millions of people, you can expect to be assaulted in the courts. But only rogue industries like tobacco and some HMO companies need to fear us, not legitimate businesses.”


Contact MBJ staff writer Becky Gillette at mullein@datasync.com.


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