Aetna faces class action lawsuit over Obamacare exits
Shareholders say they were misled over Aetna's reasons for leaving ACA market in 17 counties, leading to lost finances.
As Aetna is about to release its fourth quarter earnings on Tuesday, some of the company's shareholders have filed a class action lawsuit against the insurer seeking reimbursement for their share of the more than $1 billion they said was lost when Aetna left portions of the exchange market to better its argument for a merger with Humana.
Securities holders in the lawsuit claim Aetna misled investors that action taken to withdraw from the Affordable Care Act market in 17 counties in Florida, Georgia and Missouri was a business decision, rather than what the court ruling showed was an attempt by Aetna to lessen antitrust concerns, according to the Jan. 25 lawsuit filed in Connecticut.
In July the Department of Justice denied Aetna's proposed $37 billion merger with Humana on antitrust grounds. After a bench trial in December, United State District Court Judge John D. Bates ruled against the merger.
[Also: Court blocks Aetna, Humana merger]
Aetna said last week it was considering whether to appeal the decision.
The insurer had no update Monday on an appeal and said it did not comment on pending litigation.
In his Jan. 23 ruling against the merger, the judge said Aetna withdrew its participation in 11 of its 15 state public exchanges beginning in 2017, including in 17 counties in Florida, Georgia and Missouri, to counter Department of Justice concerns that the proposed merger would lead to a loss of competition in those areas where Aetna and Humana both compete.
"This announcement paved the way for Aetna to argue in court that there was currently no competition between it and Humana in the 17 complaint counties," the lawsuit states.
However, Aetna executives tried to conceal the reasoning behind their recommendation to withdraw, according to the ruling and the lawsuit. Aetna told investors the withdrawal was purely a business decision, aimed at reducing financial losses, the investors said in the lawsuit.
[Also: Aetna tried to leverage Obamacare involvement for government merger support, ruling says]
On Jan. 23, the day the judge ruled against Aetna and released information about its motive for leaving the Affordable Care Act market in the 17 counties, Aetna's stock price dropped $3.33 per share, or 2.7 percent, wiping out $1.17 billion on the company's market capitalization, the lawsuit said.
On Jan. 24, Aetna's stock price dropped an additional $1.59 per share, wiping out an additional $558 million, according to the federal securities class action lawsuit.
Aetna never assessed the profitability of its individual business in the 17 counties, according to the lawsuit. Aetna's on-exchange business in Florida was the company's third most profitable in 2015 and the first half of 2016, the lawsuit said.
The lawsuit was filed against Aetna's chairman and CEO Mark Bertolini and CFO and Executive Vice President Shawn Guertin, by the Westchester Putnam Counties Heavy and Highway Laborers Local 60 Benefits Fund, and others.
It was filed on behalf of all persons and entities who purchased Aetna securities between Aug. 15 and Jan. 20, 2017.
The plaintiffs want class damages in an amount proven at trial and interest, along with attorney fees.
Twitter: @SusanJMorse
