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Shareholder Class Action Lawsuit Filed Against Aetna

Shareholders filed a class action lawsuit against Aetna for leveraging its participation in the exchanges against the Department of Justice.

Health Insurance Merger

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- A shareholder class action lawsuit has been filed against the national health insurance company Aetna Inc., according to a press release from the law firm of Kessler Topaz Meltzer & Check, LLP. The announcement came earlier this week and delves into Aetna’s alleged leverage of its participation in the health insurance exchanges for the Department of Justice to overlook some of the issues of its proposed merger with Humana.

Aetna shareholders can seek assistance or participate in the class action lawsuit by contacting the Kessler Topaz Meltzer & Check, LLP law firm. The health insurance merger between Aetna and Humana was first announced in July 2015.

As more information came in and opposition mounted to this health insurance merger, the Department of Justice filed a lawsuit against Aetna and Humana in federal court alleging that the insurance merger would go against antitrust laws. The suit sought an injunction to stop the acquisition from completion.

On January 23, 2017, Judge John D. Bates of the Federal District Court for the District of Columbia ruled that the Aetna-Humana health insurance merger should be blocked because it would break antitrust laws.

When Judge Bates filed a Memorandum Opinion blocking the health insurance merger from proceeding, he stated that Aetna “tried to leverage its participation in the exchanges for favorable treatment from DOJ regarding the proposed merger.” Allegedly, a form of blackmail was used in which Aetna executives threatened to decrease participation in the health insurance exchanges in 2017 if the Department of Justice proceeded with suing the company for the merger.

The shareholder class action lawsuit may be partially attributed to dropping Aetna stocks ever since this news came out. Soon after January 23, Aetna stock fell $3.33 per share or 2.7 percent. Aetna closed at $119.20 per share on January 23 and the next day the stocks fell further to close at $117.61 per share.

The shareholder class action lawsuit claims that Aetna executives went against the Securities Exchange Act of 1934 by making false statements. The suit also alleges that the executives attempted to leverage the health insurer’s participation in the exchanges for more favorable treatment from the Department of Justice regarding the Aetna-Humana acquisition. Specifically, the class action lawsuit claims that the company threatened to drop out of the public exchanges if the Department of Justice tried to block the health insurance merger.

The complaint from shareholders states that Aetna did not drop out of a number of health insurance exchanges due to business reasons but to move forward with their threat to the Department of Justice once the lawsuit against the merger was filed. Additionally, the shareholder class action lawsuit alleges that the health insurance exchanges the company left were actually profitable for Aetna.

The class action lawsuit holds some evidence regarding its claims. For example, Aetna CEO Mark Bertolini did send a letter to the Department of Justice in which he stated that a lawsuit filed by the Department of Justice against the merger would put more financial restrictions on Aetna causing it to drop out of a number of health insurance exchanges.

On the side of Aetna, the company did operate at a loss on the health insurance exchanges since 2014. Nonetheless, David Balto, counsel for the Coalition to Protect Patient Choice, claimed last summer that the sheer size of Aetna would not require a merger to continue participating in the exchanges.

“Aetna is a very large health insurer with substantial resources that it can draw on. It doesn’t need Humana to compete in insurance markets, and DOJ's decision to block the merger likely doesn't impact its ability to participate in the healthcare exchanges,” Balto said.

“As others have reported, this claim was likely an attempt by Aetna to establish a quid pro quo with DOJ; let the merger with Humana proceed, and we will maintain and expand our presence on the exchanges,” Balto added. “DOJ rightly rejected this underhanded attempt to make a deal. The court will do the same. The courts have always held that an anticompetitive merger cannot be justified if there is some other goal that could be met.”

Other healthcare payers will need to tread carefully when pursuing health insurance mergers and working with the Department of Justice in order to avoid the type of shareholder class action lawsuits that Aetna will be managing in the months to come.

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