Aetna 2013 Annual Report Download - page 138

Annual Report- Page 132
allege that we violated state law, the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
the Racketeer Influenced and Corrupt Organizations Act and federal antitrust laws, either acting alone or in concert
with our competitors. The purported classes seek reimbursement of all unpaid benefits, recalculation and
repayment of deductible and coinsurance amounts, unspecified damages and treble damages, statutory penalties,
injunctive and declaratory relief, plus interest, costs and attorneys’ fees, and seek to disqualify us from acting as a
fiduciary of any benefit plan that is subject to ERISA. Individual lawsuits that generally contain similar allegations
and seek similar relief have been brought by health plan members and out-of-network providers.
The first class action case was commenced on July 30, 2007. The federal Judicial Panel on Multi-District Litigation
(the “MDL Panel”) has consolidated these class action cases in the U.S. District Court for the District of New Jersey
(the “New Jersey District Court”) under the caption In re: Aetna UCR Litigation, MDL No. 2020 (“MDL 2020”).
In addition, the MDL Panel has transferred the individual lawsuits to MDL 2020. On May 9, 2011, the New Jersey
District Court dismissed the physician plaintiffs from MDL 2020 without prejudice. The New Jersey District
Court’s action followed a ruling by the United States District Court for the Southern District of Florida (the “Florida
District Court”) that the physician plaintiffs were enjoined from participating in MDL 2020 due to a prior settlement
and release. The United States Court of Appeals for the Eleventh Circuit has dismissed the physician plaintiffs'
appeal of the Florida District Court’s ruling.
On December 6, 2012, we entered into an agreement to settle MDL No. 2020. Under the terms of the proposed
nationwide settlement, we will be released from claims relating to our out-of-network reimbursement practices from
the beginning of the applicable settlement class period through August 30, 2013. The settlement class period for
health plan members begins on March 1, 2001, and the settlement class period for health care providers begins on
June 3, 2003. The agreement contains no admission of wrongdoing. The medical associations are not parties to the
settlement agreement.
Under the settlement agreement, we will pay $60 million, the substantial majority of which will be payable upon
final court approval of the settlement, and pay up to an additional $60 million at the end of a claim submission and
validation period that commences upon final court approval of the settlement. These payments will fund claims
submitted by health plan members who are members of the plaintiff class and health care providers who are
members of the plaintiff class. These payments also will fund the legal fees of plaintiffs' counsel and the costs of
administering the settlement, in each case in amounts to be determined by the New Jersey District Court.
The New Jersey District Court preliminarily approved the settlement on August 30, 2013. The proposed settlement
remains subject to final court approval, and a final approval hearing is scheduled for March 2014. Final court
approval of the settlement could be delayed by appeals or other proceedings. In addition, the Company has the right
to terminate the settlement agreement if more than certain percentages of class members, or class members
collectively holding specified dollar amounts of claims, elect to opt-out of the settlement. In connection with the
proposed settlement, the Company recorded an after-tax charge to net income attributable to Aetna of
approximately $78 million in the fourth quarter of 2012. The Company will pay for the settlement with available
resources and expects the settlement payments to occur over the next twelve to twenty-four months. We intend to
continue to vigorously defend ourselves against the claims brought in these cases by non-settling plaintiffs.
We also have received subpoenas and/or requests for documents and other information from, and been investigated
by, attorneys general and other state and/or federal regulators, legislators and agencies relating to our out-of-
network benefit payment and administration practices. It is reasonably possible that others could initiate additional
regulatory action against us with respect to our out-of-network benefit payment and/or administration practices.
CMS Actions
The Centers for Medicare & Medicaid Services (“CMS”) regularly audits our performance to determine our
compliance with CMS’s regulations and our contracts with CMS and to assess the quality of services we provide to
Medicare beneficiaries. CMS uses various payment mechanisms to allocate and adjust premium payments to our
and other companies’ Medicare plans by considering the applicable health status of Medicare members as supported
by information maintained and provided by health care providers. We collect claim and encounter data from
providers and generally rely on providers to appropriately code their submissions and document their medical