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The United States District Court for the Southern District of New York has granted preliminary approval of a $350 million settlement in a lawsuit that the American Medical Association and two state medical societies filed against health insurer UnitedHealth Group.

The suit is one of at least four the AMA and several societies have filed against insurers that used databases from Ingenix Inc. to price out-of-network claims. Ingenix is a subsidiary of Minneapolis-based UnitedHealth Group. The suits alleged that the insurers conspired to underpay physicians for out-of-network services.

At least 10 national or regional insurers have reached agreement with New York Attorney General Andrew Cuomo to stop using the Ingenix databases and contribute a total of nearly $100 million to fund creation of an independent national database to process out-of-network claims. Cuomo charged the database intentionally skewed downward the "usual and customary" rates on which reimbursement was determined. Several of the insurers, including UnitedHealthGroup, publicly acknowledged that Ingenix's operation of the databases represented a conflict of interest, but defended the integrity of the data.

Under the AMA's settlement with UnitedHealth Group, the insurer will set up a $350 million fund to reimburse members of the class action lawsuit.

The insurer issued the following statement: "We are pleased with this decision and look forward to final approval of the settlement. This agreement was the product of vigorous arms-length negotiations and is supported by the American Medical Association, The Medical Society of New York and experienced class counsel. We will continue our important work of assisting physicians in their effort to provide the best possible, quality health care to their patients."

Mediware Makes Two Buys

Ancillary hospital software vendor Mediware Information Systems Inc. is expanding its footprint in the home health market with the acquisition of two companies in Andover, Mass. Lenexa, Kan.-based Mediware will pay $5.5 million for Healthcare Automation Inc., which sells home health management software, and Advantage Reimbursement Inc., which provides home health billing services for infusion, pharmacy, medical equipment and other needs. Mediware will pay an additional $1.5 million if certain performance targets are met. Healthcare Automation in early 2009 spun off Advantage Reimbursement as a separate company.