With a growing focus on the fiduciary responsibilities for healthcare plans, a national employer is suing Aetna for breaching its fiduciary duties in approving and paying “false, fraudulent, and improper claims”—and for withholding information that would allow a review of those practices.
The employer here is Kraft Heinz, who in the suit states that Aetna has served as a TPA for the Plans dating back to at least 2007. Noting that “the Plans lack the expertise to evaluate claims for payment submitted by doctors and hospitals,” the suit says that Kraft Heinz delegated that responsibility to Aetna “because Aetna represented its expertise evaluating payment claims submitted by providers for adherence to the Plans’ coverage and reimbursement policies and industry-standard coding guidelines dictated by the Centers for Medicare and Medicaid Services (‘CMS’) and the American Medical Association (‘AMA’).” Kraft Heinz self-funds its employees’ and retirees’ medical expenses. “Kraft Heinz pays Aetna to prevent payment of duplicate claims. Yet, Aetna has taken millions from Kraft Heinz to pay thousands of duplicate claims since 2016,” the suit claims.
‘False, Fraudulent and Improper Claims’
The suit (Kraft Heinz Co. Emp. Benefits Admin. Bd. v. Aetna Life Ins. Co., E.D. Tex., No. 2:23-cv-00317, complaint 6/30/23) alleges that Aetna has “breached its fiduciary duties by approving and paying false, fraudulent, and improper claims and by withdrawing undisclosed fees from the funds Aetna extracts from the Plans to pay those providers that cared for and treated Plan Participants.” Moreover, and “notwithstanding its fiduciary obligations to ‘aggressively investigat[e] all types of fraud using the latest detection, investigation, and recovery techniques,’ Aetna approved, and using Plan assets, paid millions of dollars of claims that never should have been paid. In most instances, the wrongfully paid claims were paid automatically and almost immediately with no human review.”
The suit notes that Aetna’s decision-making authority “under the 2011 and 2015 Agreements went far beyond mere application and compliance with its own guidelines. Because Aetna exercises discretionary authority and control respecting management of the Plans and the disposition of the Plans’ assets, in addition to being a named ERISA fiduciary, Aetna is also a functional fiduciary under ERISA.” The suit further states that “various courts have found Aetna to be an ERISA fiduciary when acting as a third-party claims administrator in a role comparable to that it serves for Kraft Heinz. Aetna has also represented to judicial officers in other proceedings that, when acting as a third-party claims administrator, Aetna is an ERISA fiduciary.”
Compliance with Regulatory Obligations
As for the data to review those practices, the suit states that “the medical claims data Kraft Heinz seeks belongs to Kraft Heinz. Aetna merely has the ‘right to use’ that information,” going on to note that “this makes sense because, as TPA, Aetna is ‘an agent with respect to claim payments.’ That said, ‘without this data, Kraft Heinz is unable to assess Aetna’s handling of the Plans’ funds and associated payment integrity. Kraft Heinz owns this data and has an absolute right to it.’”
Not that some data wasn’t provided. That said, the suit describes it as limited in both its detail and volume. “Aetna’s use of ‘Universal’ to describe the file is a misnomer—actually a contradiction,” the suit alleges, going on to comment that “Aetna intentionally and artificially limited this file to be a ‘tab-delimited, fixed-length, text without a header record’ with 178 Aetna-cherry-picked data fields limited to fit within a 1480-character data-string. Aetna did not provide the complete HIPAA-mandated standard transaction data. The data fields described in the dictionary bear little resemblance to the information Aetna must maintain in its data repository. Well over half of those fields contain duplicate information, are not populated or provide only filler, are related to dental claims, or are unrelated to the medical claims. The remittance advice alone, which Aetna, like all health insurance companies, necessarily generates and sends to the clearinghouses and to the doctors for each claim it processes, has over 400 data fields.”
“All such information is in Aetna’s possession, custody, and control and readily accessible to Aetna as TPA for the Kraft Heinz plans. If it is not, then Aetna is not in compliance with its regulatory obligations. Aetna’s failure to give Kraft Heinz its own standard transaction information violates Aetna’s fiduciary duties,” according to the suit. The suit goes on to assert that “Aetna’s continued refusal to produce the underlying financial information needed to link financial transfers to the medical claims continues to inhibit Plaintiffs’ ability to assess the extent to which Aetna’s practice of cross-plan offsetting has harmed it."
A footnote comments that “of course, Aetna could agree to permit Kraft Heinz or its representatives to see this information, but Aetna does not. The Consolidated Appropriations Act of 2021 included a provision that made these ‘gag’ provisions illegal.”
Rigor ‘Less’
The suit goes on to assert that Aetna “applies less rigorous claims adjudication standards to self-funded plan claims” than for its fully funded plans, and that “as a fiduciary, Aetna must devote equal resources of these departments to claims submitted to fully insured plans and self-funded plans. It cannot prioritize its own interests to the detriment of those for whom it acts as a fiduciary. Yet, on information and belief the bulk of Aetna’s overpayment, subrogation, coordination of benefits, and fraud, waste, and abuse efforts are devoted to claims submitted to Aetna’s fully insured plans. By prioritizing its own assets and resources to the detriment of the Plans, Aetna has breached and continues to breach its fiduciary duty to the Plans.”
The suit also claims that “On information and belief, Aetna employs a tactic, strategy, or procedure that involves ‘exclusion lists’—basically because being on this list commits Aetna to providing no scrutiny or limited scrutiny of the claims the providers submit for reimbursement.” Or, the suit continues, “it commits Aetna to scrutinize and properly adjudicate only a small number or a small percentage of the claims submitted for adjudication.” More specifically, the suit claims that “Aetna uses exclusion lists and consequently applied limited scrutiny to certain claims for which Kraft Heinz ultimately paid.”
And then the suit also alleges that Aetna’s contractual audit provisions “deprive the Plans of any visibility into, much less a remedy for, any improperly processed but unaudited claims”—terms that Kraft Heinz says it “had no choice but to accept… .”
More insidiously, the suit alleges that its manager of human resources compliance first had his access to an Aetna information portal blocked—and when access was restored, reports that Aetna generated and various types of financial information relevant to the Plans had been deleted. Similarly access through Kraft Heinz’ benefit broker (Willis Tower Watson) to Kraft Heinz’ data was blocked after Aetna invoked a provision in their contract that prohibited that data sharing. The suit says Kraft Heinz has attempted to access data via “various clearinghouses” but was unable to do so due to “Aetna’s intentional stripping of identifying information from the 835s.”
Stay tuned. With the provisions of the Consolidated Appropriations Act coming into focus, there’s likely to be more of these… and a growing concern among plan sponsors about the need to fulfill their fiduciary obligations with regard to health, as well as retirement, plans.
NOTE: In litigation there are always (at least) two sides to every story. However factual it may turn out to be, the initial lawsuit in any action is only one side, and one generally crafted toward a particular result. In our coverage you'll see descriptions of events qualified with statements such as “the suit says,” or “the plaintiffs allege”—and qualifiers should serve as a reminder of that reality.
