The Complaint in the Action claims that the Blue Parties violated the federal statute called the Racketeer Influenced and Corrupt Organizations Act. The Blue Parties deny the factual allegations and legal claims asserted in the Action, and deny any liability or wrongdoing. If you would like more information about the Action, you can review a copy of the Complaint at: www.BCBSPhysicianSettlement.com.

A class action is a type of lawsuit in which one or a few named plaintiffs bring suit on behalf of all the members of a similarly situated group to recover relief for all members of the group. Class actions are used by courts where the claims raise basic issues of law or fact that are common to all members of the class, thereby making it fair to bind all Class Members to the order and the judgment in the case.

The proposed Settlement with the Blue Parties will be on behalf of the following Persons:

"Class" means any and all Physicians, Physician Groups and Physician Organizations who provided Covered Services to any Plan Member or services to any individual enrolled in or covered by a Plan offered or administered by any Person named as a defendant in the Complaint or by any other primary licensee of the BCBSA or by any of their respective current or former subsidiaries or Affiliates, in each case from May 22, 1999 through May 31, 2007. The Class shall exclude: (i) all Persons who, in accordance with the terms of this Agreement, execute a timely request for exclusion (Opt-Out) from the Class; and (ii) the Blue Parties, their Affiliates and any of their officers, directors, and employees.

If you are an Active Physician against whom a Blue Plan has obtained a finding of fraud and/or abuse (as that term is defined in Section 8.3(h) of the Settlement Agreement) from a judicial, arbitral, or administrative proceeding and a corresponding final judgment for damages for the same time period for which a claim may be asserted, you are not entitled to payment for the settlement fund, regardless of your status as a class member.

The Settlement Agreement has been preliminarily approved by the Court on May 31, 2007. There will be a final Settlement Hearing - also known as the Fairness Hearing - on November 14, 2007. At that time the Court will make a determination as to whether the Proposed Settlement is fair, reasonable, and adequate and whether it should be finally approved.

The Proposed Settlement offers two forms of relief:

1. settlement fund payments to Physicians, who are Class Members and who timely file a Claim Form, from a cash Settlement Fund, and
2. Prospective Relief requiring Blue Parties to commit to certain business practices and to disclose certain information about their claims processing policies and procedures on their websites. These changes, as well as others, are more fully described in the Settlement Agreement.

If the Court approves the Settlement, the Blue Parties will establish a Fund of One Hundred Thirty One Million, Two Hundred and Nine Thousand, Five Hundred and Seven Dollars ($131,209,507) for settlement payments to Class Members. This amount will accrue interest from June 30, 2007 until it is paid to Class Members. The total payment by the Blue Parties, and any interest accrued, is the "Settlement Fund." The Settlement Fund will be distributed to Class Members who submit valid Claim Forms, or to certain associations to which Class Members direct their share or a portion thereof of the Settlement Fund. To be eligible to receive a portion of the Settlement Fund if the Settlement is approved, you must submit a valid Claim Form to the Settlement Administrator.

As a part of the Settlement, the Blue Parties have agreed to make a settlement payment of $131,209,507 which, together with accrued interest from June 30, 2007, will be distributed to Physicians who are Class Members and who timely file a Claim Form. If the Settlement is approved by the Court, these Class Members will be entitled to payments from the Settlement Fund in accordance with formulas that are set forth in the Settlement Agreement. Please see page 3, section D of the Notice for details on how the payments are allocated.

• A Class Member who since May 22, 1999 has become an inactive Physician, retired from the practice of, or otherwise ceased to practice, medicine, or has died as of May 31, 2007 (a "Retired Physician"), will receive a pro rata portion of the amount of the Settlement Fund that has been allocated to Retired Physicians.
• An actively-practicing Physician whose Gross Receipts for the calendar years 2004, 2005, and 2006 for providing Covered Services to the settling Blue Plans’ Plan Members were in the aggregate less than $5,000 will receive a single Base Amount (determined pro rata according to the claims that are filed) from the amount of the Settlement Fund that is allocated to Active Physicians.
• An Active Physician who is a member of the Settlement Class in John R. Gregg, M.D., et al.v. Independence Blue Cross, et al.; Robert P. Good, M.D. v. Independence Blue Cross, et al.; and Pennsylvania Orthopaedic Society v. Independence Blue Cross, et al. ("IBC Class Action Settlement"), who did not opt out of the IBC Class Action Settlement, and who is relying solely on Gross Receipts for providing Covered Services to IBC Members in order to recover from the Settlement Fund will receive only a single Base Amount (determined pro rata according to the claims that are filed) from the amount of the Settlement Fund that is allocated to Active Physicians.
• An Active Physician whose Gross Receipts for the calendar years 2004, 2005, and 2006 for providing Covered Services to the settling Blue Plans’ Plan Members were in the aggregate at least $5,000 but less than $50,000 will receive a pro rata portion of five (5) times the Base Amount from the amount of the Settlement Fund that is allocated to Active Physicians.
• An Active Physician whose Gross Receipts for the calendar years 2004, 2005, and 2006 for providing Covered Services to the settling Blue Plans’ Plan Members were in the aggregate $50,000 or greater, will receive a pro rata portion of ten (10) times the Base Amount from the amount of the Settlement Fund that is allocated to Active Physicians. The Settlement Fund is described in detail in Section 8 of the Settlement Agreement.

Class Members who timely submit valid Claim Forms to the Settlement Administrator are eligible to receive payment from the Settlement Fund. To qualify for a settlement payment, you must complete the Claim Form attached to the Notice, sign the form, and mail the completed and signed form by NO LATER THAN OCTOBER 19, 2007 to:

Blue Parties’ Settlement Administrator
PO Box 4349
Portland, OR 97208-4349

Please see page 6 of the Notice for additional information on submitting a Claim Form.

In order to be entitled to receive any payment from the settlement fund, you must complete and sign the

Claim Form, and the envelope returning your claim form must be mailed to the Settlement Administrator with a postmark date no later than October 19, 2007. If your signed Claim Form is not postmarked to the settlement administrator by this deadline, you will be deemed to have waived your right to receive any payment.

If you are an Active Physician against whom a Blue Plan has obtained a finding of fraud and/or abuse (as that term is defined in Section 8.3(h) of the Settlement Agreement) from a judicial, arbitral, or administrative proceeding and a corresponding final judgment for damages for the same time period for which a claim may be asserted, you are not entitled to payment for the settlement fund, regardless of your status as a class member.

If you submit a Claim Form, or if a Physician Group or Physician Organization submits a Claim Form on your behalf, you will be electing to be a Class Member and will be bound by all proceedings, orders, and judgments entered in connection with the proposed Settlement and the Settlement Agreement, including the release, covenant not to sue, and dismissal with prejudice described above. Physician Groups and Physician Organizations may submit claim forms on behalf of individual Physicians employed by or otherwise working with them who are Class Members, but not on behalf of, or with respect to Covered Services provided by, any individual Physicians who choose to Opt-Out of the Class and Settlement, or on behalf of individual Physicians who are submitting claim forms on their own behalf involving the same Covered Services.

Physician Groups and Physician Organization may submit Claim Forms on behalf of Physicians employed by or working with them without providing individual signatures from the individual Physicians, if authorized to do so by the individual Physicians and if the individual Physicians do not also submit Claim Forms on their own behalf. The list of Active Physicians should be set forth on the rider attached to the Claim Form, or on a document substantially similar, and must include all of the following information for each Active Physician:

• Physician Name
• Physician Type (example: MD or DO)
• Last four digits of each Active Physician’s Social Security Number (SSN)
• Range of Gross Receipts received from all settling Blue Plans (for a list of which, please see Page 1 of the Notice) for each Active Physician during the three-year period from 2004 through 2006:
  • Range I: Under $5,000
  • Range II: $5,000 to $49,999
  • Range III: $50,000 or over
• If an Active Physician is submitting records for any other consecutive three-year period within the time frame from January 1, 1997 through December 31, 2006, indicate the period, the Range of Gross Receipts, and the form of proof attached.

Once you have completed the Claim Form, you must mail it to the Settlement Administrator at the address printed on the Claim Form. If you submit your Claim Form by mail, the envelope must be postmarked NO LATER THAN OCTOBER 19, 2007. If you do not submit your claim form by that date, you will not receive any payment from the Settlement Fund.

The Settlement Administrator will notify you by mail if your Claim Form contains an error or insufficient information. You will have an opportunity to correct errors and deficiencies within thirty (30) days of the postmark date of the Settlement Administrator’s notification that your claim was rejected. If you correct the deficiencies within the time permitted and resubmit the Claim Form, the Settlement Administrator will process your claim. You will not be entitled to receive payment if your Claim Form is not resubmitted or if it is still deficient after resubmission. The decision by the Settlement Administrator as to the validity of a Claim Form is final. If you fail to correct a deficient Claim Form, you will be able to receive all other settlement benefits and will continue to be bound by the release and any other Court orders applicable to the class.

If the Proposed Settlement is approved and no appeals are filed, Settlement Fund payments will be mailed to the address on your Claim Form.. If an appeal is brought concerning the Settlement, payment will be made after the appeal is resolved in favor of the Settlement. If the Court does not approve the Proposed Settlement, no Settlement payments will be made.

As a part of the Settlement, the Blue Parties have agreed to commitments regarding their business practices. Please see the Settlement Agreement, page 3, section C of the Notice for a list of the commitments regarding their business practices.

In addition, the Blue Parties will disclose certain information about their claims processing policies and procedures on their websites. These changes, as well as others, are more fully described in the Settlement Agreement.

For example, the Blue Parties have agreed, subject to implementation dates and exceptions described in the Settlement Agreement to:

1. include in their contracts with Physicians a definition of Medical Necessity that bases Medical Necessity determinations on factors including generally accepted standards of medical practice;
2. use clinical guidelines that are based on credible scientific evidence published in peer reviewed medical literature (taking into account Physician Specialty Society recommendations, the views of Physicians practicing in the relevant clinical areas, and other relevant factors) when making Medical Necessity determinations;
3. provide Class Members access to the applicable Blue Party’s Medical Necessity external review process;
4. make available an external review process for resolving Billing Disputes between the applicable Blue Party and Class Members;
5. make investments designed to facilitate the automated adjudication of claims submitted by Physicians and thereby reduce the average time for the Blue Parties to process valid claims;
6. not automatically reduce the code level of evaluation and management codes billed for certain Covered Services;
7. disclose certain claims editing rules and conform bundling and other claims editing practices and procedures as specified in the Settlement Agreement;
8. not include "gag clauses" in its contracts with Class Members;
9. continue to devote resources to improve accuracy of information about eligibility of Plan Members;
10. where all necessary information is available to the applicable Blue Plan, direct the payment of valid Complete Claims within 15 business days for electronically-submitted claims and 30 days for paper claims;
11. provide relevant Class Members with the ability to view applicable fee schedule amounts for certain procedure codes related to their practice;
12. follow protocols for medical necessity determinations and claims processing for Physicians providing mental health care services as specified in the Settlement Agreement; and/or
13. establish a Compliance Dispute resolution mechanism to address disputes regarding the Blue Parties’ compliance with the Settlement Agreement.

You do not need to do anything to receive Prospective Relief if the Settlement is approved by the Court, as long as you are a Class Member and you do not exclude yourself from the Settlement. If you have opted out of the Settlement, you may change your mind and choose to participate in the Settlement by revoking your Opt-Out request by November 14, 2007 at 10:00 AM.

In order to improve its relationship with physicians, physician groups, and physician organizations, some Prospective Relief has already been made available by Blue Parties. Additional Prospective Relief will be available at about the time the Settlement is approved, and over approximately the next year thereafter. The Settlement Agreement provides more detail on the implementation dates for Prospective Relief.

If you want to remain in the class and participate in the Proposed Settlement, you may submit the Claim Form now, by following the instructions on the Claim Form. You are not required to submit a Claim Form to remain in the class. If you want to remain in the class, but do not want to submit a claim, you do not need to do anything. You will still be a member of the class if the Settlement is approved unless you exclude yourself by following the Opt-Out procedures.

Class Counsel for this proposed settlement are Whatley, Drake, & Kallas, LLC, Law Offices of Archie Lamb, LLC and Kozyak, Tropin, & Throckmorton. Class Counsel addresses and contacts are listed on page 8 of the Notice.

The Settlement Hearing will be held on Wednesday, November 14, at 10:00 AM at the United States Courthouse, Courtroom IV, Tenth Floor, Federal Justice Building, 99 Northeast Fourth Street, Miami, Florida, 33132. However, the order scheduling that hearing also provides that it may be continued by the Court without any additional notice to potential Class Members other than an announcement in open court.

At the Settlement Hearing, the Court will consider several different issues that are listed on Page 5, section IV of the Notice. The issues the Court will consider include:

1. whether the proposed Settlement is fair, reasonable and adequate to the Class Members.
2. whether the Court should certify the Class for settlement purposes pursuant to the Federal Rules of Civil Procedure. Among other things, this will require the Court to determine (i) whether questions of law or fact common to the putative Class Members predominate over questions affecting only individual putative Class Members, and (ii) whether a class action is superior to other available methods for fair and efficient adjudication of the controversy. If the Court certifies the Class for settlement purposes, putative Class Members who or which have timely elected to Opt-Out of the Class by following the procedures described below will be excluded from it.
3. The Court will consider whether to enter orders that would prevent Class Members and certain other Persons, including the defendants in the Action other than the Blue Parties, from asserting certain claims against the Blue Parties in the future.
4. The Court will consider the applications for a payment of fees by the Blue Parties to the Representative Plaintiffs and to the Representative Plaintiffs in Other Actions.
5. The Court will consider an application by Counsel to the Class for attorneys’ fees and expenses to be paid by the Blue Parties.

Any potential Class Member, or other interested Person, who or which objects to the proposed Settlement, the Settlement Agreement, the applications for attorneys’ fees, or the other matters to be considered at the Settlement Hearing may appear and present such objections,. In order to be permitted to object to the proposed Settlement, however, you must, on or before October 1, 2007 comply fully with the requirements listed on page 7 of the Notice. The requirements to object to the proposed Settlement are:

• File with the Court a written statement setting forth your objections to the matters to be considered and the basis for those objections, together with any documentation you want the Court to consider. If you intend to appear at the Settlement Hearing, you must also file a written notice of intention to appear at this same time; and
• Serve copies of all such materials either by hand or overnight delivery upon the following counsel: