December 7, 2012 / 2:15 PM / in 5 years

UPDATE 3-Aetna reaches $120 mln settlement over reimbursements

* Aetna to pay $60 mln, plus up to $60 mln more
    * Insurer accused of underpaying out-of-network claims
    * Shares of Aetna up about 2 pct

 (Adds comment from plaintiffs' lawyer, updates stock price)
    By Jonathan Stempel
    Dec 7 (Reuters) - Aetna Inc, the third-largest U.S.
health insurer, has agreed to pay as much as $120 million to
settle nationwide litigation over how it reimburses members for
out-of-network medical services.
    The accord calls for Aetna to pay $60 million into a general
settlement fund, plus as much as $60 million more, depending on
how many people submit claims.
    Aetna said it will take a $78 million after-tax charge in
the current quarter for the settlement, and that the charge will
not affect operating earnings. It expects to pay for the
settlement over the next one to two years.
    Patients and doctors accused Aetna of using databases
provided by Ingenix Inc, a unit of UnitedHealth Group Inc
, to systematically underpay claims involving services
and supplies from out-of-network providers.
    The Hartford, Connecticut-based insurer was also challenged
over how it calculated out-of-network reimbursement rates, and
over its disclosures about those calculations.
    "It continues to be a problem that insurers use improper
bases to pay low reimbursement rates," said Joe Whatley, a
lawyer for the out-of-network providers, in a phone interview.
"We hope this settlement will deter similar conduct."
    In a joint court filing on Friday, the plaintiffs and Aetna
said the accord was "adequate, fair and reasonable."
    It would cover patients who used out-of-network providers
from March 1, 2001, to the present, and cover out-of-network
providers from June 3, 2003, to the present. The litigation
began in July 2007.
    "We are pleased that we were able to reach a favorable
agreement," James Cecchi, lead lawyer for the plaintiffs, said
in a phone interview.
    The settlement requires approval by U.S. District Judge
Stanley Chesler in Newark, New Jersey. Aetna said it expects
approval in the middle of 2013, and that it may void the
settlement if too many people decide not to participate.
    On Jan. 13, 2009, UnitedHealth and Aetna agreed to stop
using the Ingenix database and to help fund a new independent
database to calculate rates, under agreements with then-New York
attorney general, Andrew Cuomo, who is now the state's governor.
    Two days later, UnitedHealth agreed to pay $350 million to
settle lawsuits over its out-of-network reimbursements.
    In early afternoon trading, Aetna shares were up 1.9 percent
at $44.24 on the New York Stock Exchange.
    The case is In re: Aetna UCR Litigation, U.S. District
Court, District of New Jersey, Nos. MDL-2020 and 07-03541.

 (Reporting by Jonathan Stempel in New York; editing by Gerald
E. McCormick,  Sofina Mirza-Reid and Matthew Lewis)
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