Aetna Removes Healthcare Provider Reimbursement Case to SDNY

Aetna Health Inc. and Aetna Health Insurance Company of New York (together, Aetna) have moved a breach of contract and New York Insurance law case to federal court from state court in the Bronx, according to a notice of removal filed on Monday. The plaintiffs, healthcare providers all part of the Montefiore Health System, assert that Aetna shorted them millions of dollars for medical treatments rendered.

The August-filed complaint explains that Montefiore has been engaged with Aetna since 1991. “In exchange for Montefiore’s provision of medical services to Aetna’s members, Aetna agreed to pay Montefiore for its services at rates set forth in the contracts,” the lawsuit states. The complaint further explains that around 2007, Medicaid Managed Care Organizations (MCOs) hired a third party consultant, Health Management Systems, Inc. (HMS), to audit their paid claims.

Montefiore explains that when individuals leave Medicare for commercial insurance, for example by getting employment with a health insurance benefit, it will take time for the MCO to discover the new coverage and retroactively disenroll the patient. “In the ordinary course, upon discovering that a patient’s coverage has changed such that commercial insurance is the responsible primary payer instead of the MCO, the MCO demands repayment of the amounts that it paid on the claims from Plaintiffs,” the complaint alleges.

In substance, Montefiore argues that Aetna circumvented the normal reimbursement protocols and paid it lower rates than those negotiated for patient treatment. The complaint alleges that Aetna did so willingly and knowingly, in part to induce Montefiore to sign several new agreements that it would never have entered into otherwise.

The complaint also alleges that Aetna received a secondary windfall by avoiding payment into the “Public Goods Pool” established under the New York Health Care Reform Act (HCRA). The HCRA pool surcharges are used to set up health care initiatives for the indigent, the lawsuit explains. Finally, Montefiore accuses Aetna of similarly shorting other private health care providers.

The lawsuit seeks compensatory damages of approximately $8.1 million, punitive damages, and injunctive relief. Montefiore is represented by Garfunkel Wild P.C. and Aetna by Baker Botts L.L.P.