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Class Action Litigation is Affecting Entire Industries

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Class Action Litigation is Affecting Entire Industries

Did you know that many states limit how much patients (or third parties acting on their behalf) can be charged for a copy of the patient’s medical records and bills? Did you know that the amounts that can be charged sometimes vary for paper and electronic records? Many lawyers who specialize in pursuing class actions know all about these rules.

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Some healthcare and records management companies affected by these rules failed to take adequate measures to conform their practices to these regulatory developments. As a result, some have charged too much for certain types of medical records. The amount of improper charges can quickly add up to create a potentially substantial liability. Class action plaintiff’s lawyers have discovered the widespread vulnerability of the healthcare field on this issue and are mounting an attack over the cost of these records. Indeed, some companies are currently facing class actions in multiple jurisdictions over the issue.

Such class actions seek, at a minimum, a refund of the excessive charges incurred by people or entities who obtained copies of medical records during the class period. Considering a period of several years, the cost of such refunds for many hospital systems, health clinics and large group practices can add up to millions of dollars. Even for smaller groups and practices, the damage claims can still be staggering.

Consider a settlement recently announced in Solon v. Midwest Medical Records Associates, Inc., Cook County Circuit Court, Chicago. The lawsuit alleged that from October of 2001 through December of 2007, Midwest charged amounts for copying electronic or digital medical records that was in excess of the specified per-page rates permitted by the Illinois Code of Civil Procedure. Under the settlement agreement submitted to the court, each class member who submits a valid and timely claim form will be entitled to a refund equal to 70 percent of the amount that was allegedly overpaid. If all eligible class members submit timely and valid claim forms, the maximum amount of the benefit to the class under the settlement is $2.25 million. Beyond that amount, the plaintiff’s counsel will also receive $1 million in attorney’s fees and $75,000 in costs and expenses.

Fortunately for the companies facing such claims, Class Action Settlement Insurance is now available to mitigate the financial drag and uncertainty caused by a class action settlement. Using figures from the settlement in Solon v. Midwest as an illustration, a company reaching such a settlement could purchase Class Action Settlement Insurance for far less than the $2.25 million potential liability amount and not have to worry about how many valid claims for how much money are ultimately submitted. The company would know right away exactly how much the settlement was costing: the price to obtain CASI coverage for the settlement. At no additional cost to the settling company, Risk Settlements would help the company to design a risk-adjusted settlement capable of being insured at the lowest cost. Such insurance would only be purchased when actually needed to cover a settlement. Additionally, by capping its exposure at the cost of CASI coverage, the company would not have to report the full $2.25 million as a liability on financial reports and statements up until such time as the settlement claim process was finally over and the ultimate, actual cost of the settlement could be known.

Lawsuits involving charges for medical records are just one type of class action litigation that Risk Settlements is capable of helping companies resolve for less. Our ability to structure cost-efficient settlements is also well-suited to many types of class action litigation, including consumer protection claims (such as deceptive or fraudulent marketing/labeling allegations) employee claims (wage & hour), and Telephone Consumer Protection Act (TCPA) claims. Generally speaking, as long as the class action can be resolved by a “claims-made” settlement, Risk Settlements can help design a settlement structure that qualifies for an insurable risk at a price that makes good business sense for the company.

Our expertise in class settlement structures and our ability to absorb the risk of any one settlement within a diverse pool of other settlements allows us to help a company obtain finality and buy peace from class litigation for a known, fixed and reasonable price. Significantly, Risk Settlements can often help a company structure a settlement that saves considerably (sometimes more than 50%) over the same size common fund. In short, CASI coverage allows a settling defendant to buy an “average” result for its settlement at a set price, put the lawsuit behind them and get back to business—without worrying about how the claims process ultimately turns out.

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