American Medical Security Group Inc., Green Bay, Wis., says it has settled a lawsuit that charged it with using an unfair pricing system and illegally converting policyholders to new health care plans.[@@]
American Medical was preparing to present the agreement to a state court in Palm Beach County, Fla., for preliminary approval today. The outcome of the hearing was not immediately available.
The lawsuit, Addison vs. American Medical Security Inc. and United Wisconsin Life Insurance Company, names 2 American Medical subsidiaries as defendants. The suit, filed in 2002, charges that the American Medical subsidiaries improperly discontinued certain health insurance policies in 1998, tried to place policyholders in different plans and used a rating method for pricing that was not legal in Florida.
Under the settlement, American Medical will not admit guilt or liability in the matter. If the court approves the agreement, the litigation would be terminated "in exchange for consideration," American Medical says.
American Medical says that it has set aside enough reserves to handle the settlement and that the agreement will have no material effect on its earnings.
"We believe our actions in the state of Florida have at all times been fair, lawful and in the interest of our customers," says Samuel Miller, American Medical's chairman. "However, this settlement allows us to remove a considerable distraction and expense from our business."
