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Peters v. Aetna Inc.

United States District Court, W.D. North Carolina, Asheville Division

September 16, 2019

SANDRA M. PETERS, on behalf of herself and all others similarly situated, Plaintiff,



         THIS MATTER is before the Court on OptumHealth Care Solutions, Inc.'s Motion for Summary Judgment [Doc. 188] and Aetna's Motion for Summary Judgment [Doc. 225].


         On June 12, 2015, the Plaintiff Sandra M. Peters filed this putative class action against the Defendants Aetna, Inc., Aetna Life Insurance Company (collectively, “Aetna”), and OptumHealth Care Solutions, Inc. (“Optum”), asserting claims pursuant to the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961, et seq. (“RICO”) and the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001, et seq. (“ERISA”). [Doc. 1]. In her Complaint, the Plaintiff alleged that Aetna engaged in a fraudulent scheme with Optum and other subcontractors, whereby insureds were caused to pay the subcontractors' administrative fees because the Defendants misrepresented such fees as medical expenses. The Plaintiff alleged that these misrepresentations allowed Aetna to illegally (i) obtain payment of the subcontractors' administrative fees directly from insureds when the insureds' deductibles have not been reached; (ii) use insureds' health spending accounts to pay for these fees; (iii) inflate insureds' co-insurance obligations using administrative fees; (iv) artificially reduce the amount of available coverage for medical services when such coverage is subject to an annual cap; and (v) obtain payment of the administrative fees directly from employers when an insured's deductible has been exhausted or is inapplicable. [Id.].

         The Plaintiff sought to bring two separate putative class actions. The first was on behalf of her Plan (“the Mars Plan”) seeking redress for all similarly situated plans, alleging violations of ERISA, 29 § 1132(a)(2) (Count III). The second claim was brought by the Plaintiff individually and on behalf of all other similarly situated plan participants in any such plan where Aetna and Optum have the accused arrangement, alleging violations of 29 U.S.C. § 1132(a)(1) and (a)(3) and 29 U.S.C. § 1104 (Count IV). The Plaintiff also asserted two claims pursuant to RICO, alleging violations of 18 U.S.C. § 1962(c) and (d) (Counts I and II), which claims were previously dismissed pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. [Doc. 54]. The Plaintiff moved for class certification with respect to both ERISA class claims, which the Court denied in March 2019. [Doc. 203]. Remaining are the Plaintiff's individual claim in Count IV, and the claim she brings on behalf of the Mars Plan in Count III. The Defendants now move for summary judgment with respect to both of these claims. [Docs. 188, 225].


         Summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A fact is “material” if it “might affect the outcome of the case.” News and Observer Publ'g Co. v. Raleigh-Durham Airport Auth., 597 F.3d 570, 576 (4th Cir. 2010). A “genuine dispute” exists “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

         A party asserting that a fact cannot be genuinely disputed must support its assertion with citations to the record or by showing that the adverse party cannot produce admissible evidence to support that fact. Fed.R.Civ.P. 56(c)(1). “Regardless of whether he may ultimately be responsible for proof and persuasion, the party seeking summary judgment bears an initial burden of demonstrating the absence of a genuine issue of material fact.” Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003). If this showing is made, the burden then shifts to the non-moving party who must convince the court that a triable issue exists. Id. Finally, in considering a party's summary judgment motion, the Court must view the pleadings and materials presented in the light most favorable to the non-moving party and must draw all reasonable inferences in favor of the non-movant as well. Adams v. Trustees of Univ. of N.C. -Wilmington, 640 F.3d 550, 556 (4th Cir. 2011).


         A. The Mars Plan

         The following facts are not in dispute. The Plaintiff is a former[1] member of an ERISA plan (“the Mars Plan” or “the Plan”) self-funded by her husband's former employer, Mars, Inc. (“Mars”), for its employees and retirees. Mars, through its benefits committee, is the Plan Administrator for the Plan. Mars hired Aetna to serve as the Claims Administrator for the Plan and to evaluate, process, and pay claims under the Plan. As part of its services to the Plan, Aetna agreed to “provide Plan Participants access to Aetna's network hospitals, and other health care providers (“Network Providers”) who have agreed to provide services at agreed upon rates and who are participating in the Network covering the Plan Participants….” [Doc. 229-14: Aetna Ex. 19 at 00002809]. It also agreed to provide case management and utilization management services. [Id.].

         Under the Mars Plan, Mars and Aetna agreed that “Aetna will issue a payment on behalf of Customer for [in-network] services in an amount determined in accordance with the Aetna contract with the Network Provider and the Plan benefits.” [Id.]. The same provision explains that those payments might be based on a range of reimbursement methodologies (including “per diem” rates) through Aetna's contracts with different “Network Providers.” [Id.].

         B. Aetna Enters into Agreements with Optum

         In 2011, in an effort to lower costs for employer-sponsored plans and members, Aetna issued a “request for proposal” to several companies with networks of physical therapists. [Doc. 229-1: Aetna Ex. 1 at 22; see also Doc. 228-3: Aetna Ex. 2 at 30 (“Aetna was seeking proposals to lower medical costs for employers and members”)]. After “carefully evaluat[ing]” the “pros and cons” of the responses to its request for proposal, Aetna concluded that “Optum had a very solid network” that could generate significant “medical cost savings for [Aetna's] members and plan sponsors.” [Doc. 228-2: Aetna Ex. 1 at 44; see also Doc. 229-2: Aetna Ex. 3 at ¶¶ 59-64 (discussing Aetna's contemporaneous savings analyses). The goal was to generate two types of savings: (1) lower rates or “unit cost reduction” [Doc. 228-2: Aetna Ex. 1 at 45] and (2) “treatment cost savings due to control of unnecessary visits/utilization” [Doc. 229-3: Aetna Ex. 4 at 00015291; see also Doc. 228-2: Ex. 1 at 208 (“Aetna entered into a relationship with Optum . . . to achieve medical cost savings for our members and plan sponsors.”); Doc. 228-6: Aetna Ex. 5 at 31 (“[W]e hired Optum to help us manage PT/OT and Chiro, so that we can save money for our employers and . . . Aetna members.”); Doc. 228-3: Aetna Ex. 2 at 102 (“We wanted to help realize savings for the plan sponsors and for the members . . . .”); Doc. 229-4: Aetna Ex. 6 at 54 (“Optum's case rate . . . g[ave] us the opportunity to have increased savings for our members and plan sponsors for rates.”); Doc. 229-5: Aetna Ex. 7 at 00015341 (“[T]he savings projection . . . increase[s] . . . the savings for the entire region.”)].

         Beginning in 2012, after a series of arm's-length negotiations, Aetna entered into a series of Provider Agreements with Optum as the provider of the networks. In these Provider Agreements, Optum agreed to make available its network of contracted physical therapists, occupational therapists, and chiropractors (hereinafter “downstream treating providers” or “DTPs”) to Aetna. In return, Aetna agreed to pay Optum flat, per-visit rates for these services. [See Doc. 229-6: Aetna Ex. 8 (covering physical therapy services); Doc. 229-7: Aetna Ex. 9 (covering chiropractic services); Doc. 229-8: Aetna Ex. 10 (renegotiating chiropractic agreement to lower rates)]. Under the contracts, Optum's DTPs were deemed to be “in-network” with Aetna for purposes of its plans. [Id. at ¶¶ 1.14, 1.15]. As part of providing these networks, Optum also agreed to provide “claims management” (i.e., utilization review), “credentialing, ” and “patient management.” [Docs. 232-2, 232-3, 232-4: Aetna Exs. 3, 4, 5]. Optum's only compensation for such management of its networks was to be the “compensation set forth in the Provider Agreement.” [See, e.g., Doc. 232-2: Aetna Ex. 3 at § 6.1].

         C. The Aetna-Optum Arrangement

         Under the Aetna-Optum contracts, Aetna typically pays Optum a flat-rate payment when an Aetna member receives a covered service by a DTP. [See Doc. 229-1: Aetna Ex. 1 at 71-72 (explaining payment structure under the Aetna-Optum arrangement)]. Optum, in turn, pays the DTP a specified amount for the services performed, according to the rates that Optum has negotiated through its separate agreement with that provider. [See Doc. 229-9: Aetna Ex. 11 at 124-125 (“Each contract between Optum and the providers are ...

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