Aetna and OptumHealth Care Solutions will have to relitigate allegations that they used bogus codes to inflate charges, a federal appellate judge ruled.
Circuit Judge G. Steven Agee reversed a lower court's ruling in favor of Aetna and Optum, allowing Sandra Peters to pursue her class-action lawsuit. Peters claims that the insurer and provider violated the Employee Retirement Income Securities Act by agreeing to use a "dummy code" to cover up unbillable administrative fees and overcharging Peters and a self-funded healthcare plan Mars Inc.
She is seeking restitution, surcharge, disgorgement, and declaratory and injunctive relief on behalf of all ERISA beneficiaries as well as Mars.
"(Peters) has produced sufficient evidence for a reasonable factfinder to conclude that Aetna was operating as a functional fiduciary under ERISA and breached its fiduciary duties," Agee wrote in the opinion filed Tuesday in a federal appellate court, adding that Optum could be liable for "engaging in prohibited transactions."
The district court concluded that neither Aetna nor Optum could be held liable under ERISA because they were not operating as fiduciaries. But the court erred in that judgement as well as its denial of Peters' motion for class certification, Agee wrote. Aetna and Optum did not respond to requests for comment.
Peters initially alleged in a 2015 complaint that she and Mars were overcharged from 2013 to 2015, when she received treatment from chiropractors and physical therapists provided by Optum under its contract with Aetna.
She claimed that Optum added a dummy CPT code to cover up its administrative fee of $36.89, which amounted to a bundled fee of $70.89 when combined with the $34 negotiated charge. Aetna allegedly based Peters' out-of-pocket costs on the bundled payment with unbillable administrative fees. She was responsible for $14.18 rather than $6.80, she claimed.
Peters provided evidence that allegedly showed that Aetna requested a proposal that built the administrative services pricing into the provider fee schedule. "One of Aetna's original goals of the service model design was to 'bury' the admin fee within the claims process," the evidence cited in the opinion reads.
The district court sided with the defendants, arguing that Peters and Mars ultimately saved money because of the Aetna-Optum relationship, even with the inflated bundled rate. The Aetna-Optum contract saved "both Aetna plan sponsors and members millions of dollars" on an aggregate annual basis, the district court ruled.
But the appellate court found that the financial loss analysis must be based on the individual claims level rather than the total.
"The fact that Peters may have benefited from the determination of certain claims does not offset the fact that she was harmed by others," Agee wrote.