Judge gives final approval to Humana, Sunrise settlement

Kim Smith

Wednesday, Dec. 1, 1999 | 11:23 a.m.

A federal judge gave his final approval Tuesday to a multimillion-dollar settlement involving Sunrise Hospital and its former owner, Humana Health Insurance.

U.S. District District Judge David Hagen called the $28.8 million settlement "fair, reasonable and adequate" in court documents filed Tuesday.

The 10-year-old class-action lawsuit claimed that as many as 84,000 Nevada patients and their employers were overcharged more than $140 million in hospital bills between 1984 and 1988.

The lawsuit said that Humana had an agreement with patients entering Sunrise Hospital in which it would pay 80 percent of the bills and the patients would pay the rest. However, the insurance company struck a deal with the Sunrise and paid lower rates. The savings were never passed on to the patients.

The settlement does not include an admission of guilt by Humana.

"Humana is pleased to have this matter behind us," Humana spokesman Ross McLerran said this morning. He declined to comment further.

Willie Andrews, one of the plaintiffs in the case, said she was pleased to have the matter resolved. She was hospitalized at Sunrise in 1985.

"I'm stunned, I can't believe it," Andrews said. She said she does not yet know what her portion of the settlement will be.

According to court documents, the plaintiffs' attorneys will receive more than $12 million in fees and about $920,000 in costs.

About $12 million will be divided among the patients who made co-payments when they were hospitalized at Sunrise and about $4 million will be paid to those patients' employers.

The investigation into the situation ultimately caused the Nevada Legislature to change the state insurance law so discounts would be passed on to patients.

The case even ended up in the U.S. Supreme Court at one point.

The patients' attorneys tried to convince U.S. District Judge Philip Pro that the Racketeer Influenced and Corrupt Organizations Act (RICO) could be used against Humana and the hospital, but Pro ruled that the act could not be used because it would impair the state's role in regulating the insurance business. When the 9th Circuit Court of Appeals overruled Pro's decision, the attorneys went before the U.S. Supreme Court, which ruled that RICO statutes could be applied.

Because the RICO act could be used, Humana could have ended up paying out triple damages in the suit, but the matter was tentatively settled in August, eight months after the Supreme Court issued its ruling.

Sunrise Hospital is now owned by Columbia/HCA.