WellPoint Settles Class Action

The company sees the move taking a dime-a-share bite out of second-quarter earnings.
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WellPoint

(WLP)

agreed to pay up to $200 million to settle federal class-action suits claiming systematic underpayment for medical services.

Plaintiffs claimed WellPoint and other companies let hospitals overbill subscribers for services they illegally failed to cover.

WellPoint agreed to pay $135 million to physicians and to contribute $5 million to a not-for-profit foundation. In addition, up to $58 million will be paid in legal fees, to be determined by the court. WellPoint expects to take a second-quarter charge of a dime a share.

In settling with the plaintiffs, who include 700,000 physicians nationwide, WellPoint joins

Aetna

(AET)

,

Cigna

(CI) - Get Report

,

Prudential

(PRU) - Get Report

and

Health Net

(HNT)

.

WellPoint, the Indianapolis-based HMO giant that operates as Blue Cross and Blue Shield in states including California, Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine and Missouri, called the deal "an important step that will further accelerate the company's current efforts to work collaboratively with physicians to support the delivery of high-quality, affordable health care coverage."

"We see this agreement as a very important step in further collaborating with physicians. By working together, we can find ways to continuously improve the health of our members and find real solutions to the most complex health care issues facing our country today -- affordability of care, access to care and the uninsured," said CEO Larry Glasscock. "We look forward to forging a closer partnership with the physician community in order to truly transform health care for the better."

Early Monday, WellPoint rose 73 cents to $71.48.