National Class Action Lawsuit Filed Against the Nation's Largest HMO Charging RICO, ERISA Violations

Filed on Behalf of 18.3 Million Aetna HMO Enrollees

Allegations Include Mail and Wire Fraud, 'Heavy-Handed Extortionate Conduct'

Oct 07, 1999, 01:00 ET from Scruggs, Millette, Bozeman & Dent, P.A.

    HATTIESBURG, Miss., Oct. 7 /PRNewswire/ -- Charging the nation's largest
 health maintenance organization with misrepresentation, fraud and extortion to
 "systematically limit, delay or deny medical care" to its members, a group of
 nationally renowned attorneys, called the REPAIR1 Team, filed a national class
 action lawsuit on behalf of 18 million HMO enrollees against Aetna, Inc., and
 25 subsidiaries alleging violations of the Racketeer Influenced and Corrupt
 Organizations (RICO) Act and the Employee Retirement Income Security Act
     The lawsuit charges that Aetna engaged in a "nationwide fraudulent scheme"
 to enroll members by promising quality healthcare and then denying needed
 services to boost corporate profits and dominate the HMO marketplace. It also
 charges a "pattern of heavy-handed extortionate conduct against Aetna's
 physicians" designed to coerce them into accepting contracts imposing
 "unreasonable, and often unsafe, restrictions on the level of medical services
 that may be delivered."
     "Never again will Aetna or any HMO place profits before patient care,"
 said Richard Scruggs, counsel for class representative Jo Ann O'Neill and the
 18.3 million Aetna enrollees who are members of the class. "When you get sick,
 you need an M.D., not an M.B.A. Unfortunately, Aetna used accountants, not
 doctors, to make life-or-death medical decisions.
     "Our lawsuit will hold this Goliath accountable for its broken promises to
 millions of Davids," Scruggs said. "It will compensate Aetna enrollees for the
 value of care promised but denied them and change forever the way this HMO
 operates. Thus, it has the potential to dramatically improve the quality of
 healthcare throughout the nation.
     "Clearly, Aetna needs to learn some lessons in responsibility," Scruggs
 charged. "Just yesterday, The Wall Street Journal reported that Aetna CEO
 Richard Huber claims 'If medical mistakes are made ... it's the doctors'
 fault, not Aetna's.' In fact, our lawsuit proves that Aetna used extortion to
 force doctors to sign contracts that the American Medical Association says are
 'dangerous,' 'interfere with medical decision-making' and 'undermine the
 patient-physician relationship.'
     "In a perfect world," Scruggs said, "No HMO would substitute hypocritical
 business practices for the Hippocratic Oath. No HMO would promise its members
 services it has no intention of delivering. And no HMO would be allowed by
 Congress or regulatory authorities to get away with it. But in the real world,
 our lawsuit is the last line of defense for millions of men, women and
 children who were sold a bill of goods at the expense of their health. They
 have asked us to change this unconscionable healthcare system through the
 Courts and that is what we will do."
 1 REPAIR: RICO & ERISA Prosecutors Advocating for Insurance company Reform.
     The lawsuit seeks compensatory damages to class members, which can be
 tripled under RICO; an injunction preventing Aetna from pursuing the practices
 alleged by the class action; punitive damages; the imposition of a Cy Pres
 Trust to be administered by the Court; prejudgment and post-judgment interest;
 and other relief the Court deems appropriate.
     Filed today in U.S. District Court, O'Neill v. Aetna details Aetna's
 alleged strategy "of fraudulently inducing increased membership to obtain
 revenues, while actually aggressively and deceitfully seeking to reduce the
 delivery of quality healthcare services provided its members to maximize its
 profit." It cites multiple acts of mail and wire fraud, violations of the
 Travel Act, "heavy-handed extortionate conduct," and a breach of Aetna's
 fiduciary duties under ERISA.
     The lawsuit charges that Aetna engages in a variety of practices that run
 contrary to what the company tells enrollees and that harm the quality of
 care, including:
     -- Limiting referrals to specialists and penalizing doctors who violate
        Aetna's profit-driven criteria;
     -- Gagging doctors' ability to communicate openly with their patients
        about their care and the inadequacy of Aetna's policies;
     -- Denying reimbursement for emergency care despite assurances that Aetna
        complies with the "prudent layperson" standards;
     -- Usurping sound medical and clinical standards by controlling medical
        necessity determinations;
     -- Imposing dangerous financial incentives that discourage inpatient or
        more expensive procedures and tests;
     -- Restricting prescription drug formularies despite promising
        beneficiaries that they will get the medications prescribed by their
        doctors; and
     -- Imposing harsh economic sanctions on doctors who challenge Aetna on
        behalf of their patients.
     The lawsuit notes that Aetna's merger with U.S. Healthcare in 1996, its
 acquisition of NYLCare in 1998 and its purchase of Prudential Healthcare this
 August have given it disproportionate market clout. This gives Aetna the power
 to engage in "Undisclosed heavy-handed profit and market dominance strategies
 designed to coerce physicians into accepting contracts and policies and
 practices on a 'take it or leave it' basis. ...  The defendants engage in
 extortionate conduct designed to exploit physician fear of economic loss or
 loss of business."
     "Under Aetna's incentive and disincentive arrangements, the fewer the
 services provided to members, the greater the physicians' compensation," the
 lawsuit charges. "Conversely, the more services provided, even where deemed by
 Aetna physicians to be medically necessary, the greater the likelihood the
 physicians will owe money at the end of the reconciliation of budget period.
 These arrangements are specifically designed to cause Aetna physicians to
 become unwilling co-conspirators in the reduction or limitation in the
 delivery of healthcare services to the plaintiff and the class in order to
 maximize profits."
     The RICO count of the lawsuit seeks the "return of the portion of premium
 payments allocable to the profits the defendants derived through fraud and
 non-disclosure" or  "alternatively, disgorgement of profits made by the
 defendants through fraud and nondisclosure," either of which are subject to
 treble damages.
     The ERISA breach of fiduciary duty count seeks "restitution of all sums of
 money paid to the defendants during such time as defendants were engaged in
 the breach(s) of the fiduciary obligation(s) imposed by law. The defendants
 properly should be compelled to disgorge all such revenues received during the
 period of its wrongful conduct, including fiduciary breach, fraud and non-
 disclosure of its conflicted private interests."
     Scruggs noted that this lawsuit is unrelated to the "Patients' Bill of
 Rights" before Congress. "That legislation would give individuals the right to
 sue if they are harmed by HMO treatment decisions. Our class action is
 designed to transform the entire system so that no patient is ever again
 harmed by an HMO."
     Members of the class are enrollees in any of Aetna's HMO plans at any time
 between July 19, 1996 (the date Aetna acquired US Healthcare) to the present.
     Members of the REPAIR Team filing on behalf of the class are Richard F.
 Scruggs and Sidney A. Backstom of Scruggs, Millette, Bozeman & Dent, P.A.;
 Ronald L. Motley, H. Blair Hahn and Donni E. Young of Ness, Motley, Loadholt,
 Richardson & Poole, P.A.; Walter Umphrey and Keith Kebodeaux of Provost
 Umphrey Law Firm, L.L.P.; Paul S. Minor of Minor & Associates; John Eddie
 Williams and Herbert T. Shwartz of Williams Bailey Law Firm, L.L.P.; Joseph C.
 Langston of Langston, Langston, Michael, Bowen & Tucker;  Wayne D. Blackmon,
 Esq.; Hiram Eastland of Eastland Law Offices; George Chandler, Attorney at
 Law; Fred Furth and Ben Furth of Furth, Fahrner & Mason; Harry Potter; David
 O. McCormick, P.A .; and Cary Patterson of Nix, Patterson & Roach, L.L.P.

SOURCE Scruggs, Millette, Bozeman & Dent, P.A.