July 11, 2005

WellPoint settles with doctors, takes charge

CHICAGO (Reuters) - Health insurer WellPoint Inc. said on
Monday it settled class-action lawsuits for $135 million with
thousands of doctors over their claims of systematic
underpayment for medical services.

Indianapolis-based WellPoint expects to take a pretax
charge of 10 cents per share, or $103 million, in the second
quarter of 2005 as a result of the deal.

WellPoint joins Aetna Inc. and Cigna Corp., among other
HMOs that have settled with a class of about 700,000 doctors
who took on the industry in a mammoth class action several
years ago.

Physicians claimed unfair and arbitrary reimbursement that
in some cases compromised quality of care.

Analysts including Goldman Sachs analyst Matthew Borsch
expect the remaining health insurers to eventually settle with
the doctors. A trial is still set for the remaining defendants,
including UnitedHealth Group Inc., the second-biggest U.S.
health plan.

Wellpoint became the biggest U.S. health insurer last year
after it was acquired by the smaller Anthem Inc.

Also as part of the settlement, the company agreed to
contribute $5 million to a not-for-profit foundation to promote
quality health care for the underserved.

The company said it will pay up to $58 million in legal
fees, to be determined by the court.

WellPoint shares rose 50 cents or 0.7 percent to $71.25 in
opening trade on the New York Stock Exchange.