UnitedHealthcare’s Liposuction Class Deal Rejected as ‘Cosmetic’

Oct. 13, 2021, 2:32 PM

UnitedHealthcare Insurance Co.'s proposed class settlement with patients seeking coverage for specialized liposuction enriches the patients’ lawyers while limiting their rights and giving them few benefits, a San Francisco federal judge said in an order declining to approve the deal.

The deal—which pays class counsel $875,000 in fees—requires UnitedHealth to change its coverage position to provide that liposuction is a medically proven treatment for lipedema and is thus medically necessary in certain cases. The insurer also agreed to allow patients to resubmit claims for liposuction that were previously denied, and to review new claims for the procedure under the updated coverage guidelines.

But the deal is plagued with red flags indicating possible collusion, Judge William Alsup of the U.S. District Court for the Northern District of California said Tuesday. Most notably, the deal pays class counsel attorneys’ fees under a “clear sailing agreement” in which the parties agreed on the fee award without judicial input. This provision, which violates Alsup’s prior order on class litigation, “stands out as a sore thumb and a red flag,” he said.

Alsup also objected to how class members will be deemed eligible for benefits under the deal, saying the proposed criteria could deny benefits to “deserving class members” with especially severe lipedema. And even if this criteria were reasonable, “it would be unfair to bind the class to criteria forever and prevent them from challenging the reasonableness of the criteria,” he said.

“Sadly, this is another class settlement proposal in which class counsel get vast amounts of cash but the class members get merely a cosmetic settlement,” Alsup said.

Alsup previously expressed concern about the deal in August, when he asked the parties to answer nine questions about the deal’s fairness.

The lawsuit accuses UnitedHealth of incorrectly treating liposuction as an unproven treatment for lipedema, which is a chronic buildup of fat tissue that affects mainly women and causes pain, mobility problems, and joint disorders. Unlike lifestyle-related or diet-induced obesity, lipedema typically requires liposuction because it can’t be treated with bariatric surgery or lifestyle changes, the lawsuit claims.

United, Cigna Corp., Anthem Inc., and Aetna Life Insurance Co. have all been sued over liposuction coverage by lipedema patients.

Gianelli & Morris ALC represents the patients. Hogan Lovells US LLP represents United.

The case is Caldwell v. UnitedHealthcare Ins. Co., 2021 BL 389449, N.D. Cal., No. 3:19-cv-02861, order denying settlement approval 10/12/21.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com

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