HMO for Veterans Wins Appeal of Class Action

     (CN) – A lawsuit accusing Humana Military Healthcare Services of systematically underpaying hospitals for veterans’ medical care can’t proceed as a class action, the 11th Circuit ruled.

     The court decertified a class of 260 hospitals in six states, agreeing with Humana that the hospitals’ individual claims trumped the common issues.
     Because each state has its own body of laws and methods of payment, the three-judge panel ruled, a class action would likely be “severely unmanageable.”
     The federal government contracted Humana in 1995 to provide medical care to veterans. The HMO then entered into agreements with hospitals in Alabama, Florida, Georgia, Mississippi, South Carolina, Tennessee and parts of Louisiana and Arkansas for certain outpatient services.
     In November 1999, Humana changed how it reimbursed hospitals, resulting in lower payments for most providers.
Several hospitals filed suit, grouping their contracts into six categories that they claimed could serve as subclasses in a class action.
     “Notably, however, one of the six categories was a ‘miscellaneous’ one containing over 20 contracts,” Judge Stanley Marcus wrote for the Atlanta-based panel.
     “Given the lack of uniformity within several of the proposed contract subclasses, the existence of more than 20 contracts that do not belong to any meaningful category, and the likely need for at least some subdivision according to applicable state law, there may be little value left in a class action,” Marcus wrote.
     Class certification “was an abuse of discretion,” he concluded, reversing and remanding.

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