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Read Making a Killing

home / healthcare / press releases

NEWS RELEASE
Apr 19, 1999


CONTACT: Jamie Court - 310-392-0522 x327

Nation's Largest Managed Care Company Sued Under Racketeering Law

Consumer Group Challenges Aetna For Systemic Fraud
In the first federal class action lawsuit against an HMO for racketeering since the U.S. Supreme Court allowed such lawsuits earlier this year, Aetna was sued for wide-spread fraud in its advertising, marketing and membership materials.

The case against Aetna, which now provides health coverage for one of every twelve Americans, was brought under the Racketeer Influenced and Corrupt Organizations Act (RICO) today in the United States Court For the Eastern District of Pennsylvania by the non-profit Foundation For Taxpayer and Consumer Rights and the private law firm of Milberg Weiss Bershad Hynes & Lerach LLP.

The lawsuit alleges that Aetna consistently advertises and represents that all its policies are committed to maintaining and improving quality, while, in fact, there is a systemic and coordinated effort at the company to undermine quality medical care in order to cut costs.

According to the complaint, while Aetna claims to be primarily dedicated to improving "quality," the company:
  • defines medical necessity in its contact with physicians as the "least costly alternative;";

  • restricts the ability of physicians to provide quality medical services, according to the American Medical Association;

  • provides financial incentives that reduce the quality of care, including systems that financially reward physicians who see more patients and penalize doctors who do not;

  • retains the power to unilaterally amend its physician contracts in order to create barriers to access to care, even though Aetna represents physicians have control over care;

  • requires physicians to accept "take-it-or-leave" contract terms even if those terms endanger patients.
"Aetna should no longer be able to advertise and represent that they are primarily committed to quality, when in fact their systems are designed to reap profits and undermine quality medical care," said Jamie Court, advocacy director for the Foundation for Taxpayer and Consumer Rights.
" What is at stake in this case is whether HMOs like Aetna will be able to advertise and solicit new members by defining quality based on the least costly path rather than based on what medical professionals think is necessary according to medical ethics."

"Given the number of patients and doctors Aetna has, this is the single most important case for patients ever filed," said Ed Howard, Senior Counsel for the Foundation. "This case is simply about forcing HMOs publicly to own up as to why their in the business: to make money."

The U.S. Supreme Court ruled on January 20, 1999 in Humana v. Forsyth that HMOs can be sued under RICO -- until then courts had precluded many RICO claims that rose from insurance fraud.

If its pending merger with Prudential is approved, Aetna will provide health coverage for one of every ten Americans. The Foundation For Taxpayer and Consumer Rights is a non-profit, non-partisan organization that houses Consumers For Quality Care, a nationally-recognized health care watchdog group.

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