Organized psychology recently became involved in class action litigation against 63 Blue Cross and Blue Shield companies. The plaintiffs in this case--all nonphysician health-care professionals and associations that represent them--allege that managed-care companies conspired to reduce and delay payments to health-care providers.

The APA Practice Organization will coordinate with the Florida Psychological Association (FPA), which recently joined as a named plaintiff in the case in federal court in Miami.

The case against managed care

A basic claim against the managed-care companies challenges their practice of systematically manipulating Current Procedural Terminology (CPT) codes--which are the basis for reimbursing psychologists and other health-care professionals. This manipulation allows the companies to pay those professionals significantly less than the amounts to which they are entitled.

Some of the claims against the managed-care companies have been alleged before in other cases, but the legal methods employed in this case are unique.

The plaintiffs allege that the companies violated the Racketeer Influenced Corrupt Organizations Act (RICO), which was originally created to prosecute organized crime. Under the RICO statute, the plaintiffs allege that the 63 companies conspired to do wrong--by delaying payments, for example--against health-care providers. Also, this is a national class action asserting claims on behalf of all psychologists who submitted claims to these companies over a 10-year period.

"This is a relatively new approach," says Russ Newman, PhD, JD, APA's executive director for professional practice. "The use of RICO class actions in these kinds of actions was recently approved by the Eleventh Circuit Court of Appeals in a related case before the same federal judge in Miami."

"This is uncharted territory in terms of the RICO part of the case," says Harry Reiff, PhD, FPA president, "but we have long been concerned that the companies have been reducing and/or delaying payments to psychologists."

Possible outcomes

FPA leaders decided to officially join the suit as a named party this summer after consulting with the APA Practice Organization.

"We thought it was a good idea for psychologists to be represented in the case, and because the case is in Florida, it made sense for FPA to be a named party because of its interest and ability to pursue the fight," says Newman. The Practice Organization will continue to play a consultative role in the case and, he adds, will also continue to evaluate other possible roles.

FPA's hope is that the case will achieve "positive outcomes for individual psychologists in terms of reversing slow and inappropriately rejected payments," says Reiff, adding: "This litigation seeks positive, psychology-friendly changes in policies that govern things such as payment schedules."

APA and FPA hope to build on the success of litigation first filed in 2000 by a class of physicians against the nation's largest managed-care companies that also asserts RICO violations. So far, two settlements have involved multimillion-dollar payments to the physician class (though that translated into small payments for individual physicians) and significant policy changes, including:

  • Agreements that ban automatic manipulation of certain CPT codes.

  •  Provisions for prompt payment of claims.

  • Simplified claim submission, payment and re-credentialing procedures.

"We have looked carefully at these cases," says Newman, "and we see the opportunity to address a variety of problems with managed care that our members have been complaining about for years."

The first briefings in the FPA case will likely occur early next year, according to Alan Nessman, JD, special counsel for legal and regulatory affairs in the APA Practice Directorate.

Jennifer Daw Holloway is a writer in Washington, D.C.