Humana settles physician dispute, to take charges

October 18, 2005

CHICAGO, Oct 18 (Reuters) - Humana Inc.(HUM.N) said on Tuesday it has settled a six-year dispute with representatives of more than 700,000 physicians over reimbursement and will make a $40 million payment.

Humana also will pay up to $18 million in legal fees to be determined by the court.

Humana said it would record pretax expenses of about $72 million during the third quarter. After tax, the charge would be $45 million, 27 cents per diluted common share.

Humana joins other health insurers such as Aetna Inc. (AET.N) and Cigna Corp. (CI.N) in settling with the doctors.

The agreement still must be approved by a federal judge in Miami, Humana said.

Banc of America Securities analyst Joseph France said in a research note that he thinks the lawsuit was settled at a fair price and should end Humana's involvement in the class action case.

Shares of Humana rose nine cents to $45.74 in Tuesday afternoon trading on the New York Stock Exchange. (Additional reporting by Lewis Krauskopf in New York)

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