Aetna, Hartford, Conn., said it agreed to pay an undisclosed sum to settle a shareholder lawsuit accusing the No. 3 health insurer of hiding accounting misstatements.
Under the proposed settlement, all complaints against Aetna's former chairman, William Donaldson -- now chairman of the Securities and Exchange Commission -- and Aetna's current chairman and chief executive officer, John Rowe, M.D., would be dismissed, Aetna spokesman David Carter said. The agreement must be approved by U.S. District Judge George Daniels in New York.
The lawsuit alleged that Donaldson, Aetna's chairman from February 2000 to April 2001, knew the company had "material problems" establishing adequate reserves for medical costs. According to the suit, Donaldson and Rowe hid the problems in Aetna's regulatory filings and news releases. The complaint asked for undetermined damages and class-action status on behalf of investors who suffered losses from 2000 to 2001.
Carter said the company disputed the allegations but saw a settlement as a way to avoid further litigation costs.