Aetna Ingenix Suit Gutted by Court; All But Two Counts Are Dismissed

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By Matthew Loughran

July 1 — A lawsuit challenging Aetna's use of allegedly flawed data for setting the usual, customary and reasonable rates for reimbursing out-of-network services was significantly pared down by a federal judge in New Jersey in a June 30 decision.

Judge Katherine S. Hayden of the U.S. District Court for the District of New Jersey, considering the case after massive opt-outs caused the termination of a $120 million proposed settlement between the parties, dismissed all but two counts of the complaint with prejudice in an unpublished opinion.

According to the court, only a claim for benefits under Section 502(a)(1)(B) of the Employee Retirement Income Security Act and a state law breach-of-contract claim brought by subscribers to Aetna-managed health plans survived the motions to dismiss.

The consolidated suit is one of many filed in recent years alleging that out-of-network providers were underpaid because of reliance on databases owned and operated by Ingenix Inc.

Ingenix Database Use Spurred Suit 

In 2007, Michele Cooper filed a class action complaint claiming that Aetna improperly reduced reimbursement levels to nonparticipating providers.

The suit charged that Aetna members received adverse benefit determinations that improperly led to reduced health insurance benefits as a result of Aetna's improper usual, customary and reasonable (UCR) rate calculations for all types of services rendered by nonparticipating providers.

The plaintiffs challenged Aetna's use of UCR databases owned and operated by Ingenix, now known as OptumInsight, a wholly owned subsidiary of UnitedHealth Group Inc.

The Ingenix databases were flawed and improperly skewed UCR downward, the plaintiffs contended.

In addition to claims brought by Aetna members, the multidistrict litigation also included claims brought by physician and nonphysician out-of-network providers. The plaintiffs alleged violations of ERISA, the Racketeer Influenced and Corrupt Organizations Act, antitrust claims under the Sherman Act and state laws.

Proposed Settlement Terminated 

In August 2013, the court granted preliminary approval to a settlement that would have required Aetna to pay into three funds totaling $120 million that was available for members of both a class of subscribers and a class of providers.

However, according to the court, the settlement also included a provision that permitted Aetna to terminate the agreement if the amount claimed by class members who decided to opt out of the settlement exceeded the settlement amount by $20 million.

As the court noted, the opt-out levels exceeded the stipulated threshold by hundreds of millions of dollars and Aetna filed a notice to terminate the agreement.

Shortly thereafter, the classes submitted a third amended complaint in the case, reasserting nearly all previous counts in the action.

Aetna, UnitedHealth and Ingenix all moved to dismiss the claims on various grounds. They attacked the standing of the providers and the associations to bring the claims under ERISA. They also asserted that the plaintiffs hadn't sufficiently pleaded violations of RICO or the antitrust laws.

The court agreed on both points and dismissed those claims with prejudice, citing an agreement by the plaintiffs not to extend discovery in the action any further, which would be required by a dismissal with leave to amend.

Court Dismisses Most ERISA Claims 

The court also dismissed claims that the subscribers brought against Aetna claiming that the insurer breached ERISA's disclosure requirements by failing to inform them of the methodology behind the Ingenix database.

According to the court, reading sections 102 and 104 of ERISA to require that Aetna provide notice of the methodology behind the database creation had no basis in the text of those provisions.

On that point, the court agreed with two earlier decisions in similar cases involving the Ingenix database, Franco v. Conn. Gen. Life Ins. Co., 818 F. Supp. 2d 792, (D.N.J. 2011) and In re WellPoint, Inc. Out-of-Network “UCR” Rates Litigation, 903 F. Supp. 2d 880, (C.D. Cal. 2012).

The court also dismissed the fiduciary duty breach claims brought by the subscriber plaintiffs as duplicative of their claims for benefits under Section 502(a)(1)(B) of ERISA.

Finally, the court dismissed claims by Darlery Franco—the named plaintiff in the Franco case against Connecticut General Life Insurance Co.—who also brought claims against Aetna in the instant case.

According to the court, Franco's Aetna plan required her to bring suit by May 2007, within three years of when proof of loss was due. The court found that the instant case wasn't filed until July 2007 and that Franco didn't join it until November 2007.

Therefore, applying the U.S. Supreme Court's decision in Heimeshoff v. Hartford Life & Accident Ins. Co., 134 S. Ct. 604 (U.S. 2013) , 134 S. Ct. 604 (U.S. 2013), the court found that Franco's claims were untimely filed under the contractual limitations period and dismissed them.

The class members were represented by Abby Resnick-Parigian, Angelo J. Cifaldi, Kevin M. Berry, Lynne M. Kizis, Michael F. Fried, Philip A. Tortoreti, Eric J. Marcy, Kevin P. Roddy and Keven H. Friedman of Wilentz, Goldman & Spitzer PC, Woodbridge, N.J.; Barbara J. Quackenbos and Barry M. Epstein of Epstein & Quackenbos PC, Roseland, N.J.; Donald E. Haviland Jr. of Haviland Hughes, Ambler, Pa.; Robert J. Axelrod of Alexrod & Dean LLP, New York; Donald A. Ecklund, John M. Agnello, Lindsey H. Taylor and James E. Cecchi of Carella, Byrne, Cecchi, Olstein, Brody & Agnello, Roseland, N.J.; Randee M. Matloff of Nagel Rice LLP, Roseland, N.J.; and Stephen A. Weiss of Seeger Weiss LLP, New York.

Aetna was represented by Michael X. McBride, Liza M. Walsh, Patricia A. Lee and Tricia B. O'Reilly of Connell Foley LLP, Roseland and Newark, N.J.

Ingenix and UnitedHealth were represented by Melissa Toner Lozner, Michael B. Himmel, Natalie Janet Kraner and Joseph A. Fischetti of Lowenstein Sandler LLP, Roseland, N.J., and Nicholas J. Pappas of Weil Gotshal & Manges LLP, New York.

To contact the reporter on this story: Matthew Loughran in Washington at

To contact the editor responsible for this story: Jo-el J. Meyer at

The opinion is at

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