4th Circ. revives dummy-code lawsuit against Aetna, Optum  

Logos of CVS and Aetna are displayed on a monitor above the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., December 5, 2017. REUTERS/Lucas Jackson

(Reuters) - A federal appeals court on Tuesday reversed a ruling for Aetna Inc and OptumHealth Care Solutions, reviving a potential class action alleging that they agreed to use a “dummy code” to disguise unbillable administrative fees as billable medical treatment.

The 4th U.S. Circuit Court of Appeals allows Sandra Peters — represented by Zuckerman Spaeder and the Van Winkle Law Firm, with amicus support from the American Medical Association — to proceed with her claims for disgorgement of profits, surcharge, and declaratory and injunctive relief, on her own behalf and on behalf of Mars Inc’s self-funded health plan, under the federal Employee Retirement Income Security Act (ERISA).

Aetna, Optum and their attorneys did not immediately respond to requests for comment on Tuesday. Aetna was represented by Baker Botts and Holman Law; Optum was represented by Alston & Bird.

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D. Brian Hufford of Zuckerman Spaeder, who argued the appeal for Peters, said the decision “highlights the importance of self-funded plans having a full understanding of how claims administrators are processing claims and setting administrative fees.”

“All too often, the process is being done behind closed doors and no one is in a position to oversee what the claim administrator is doing,” Hufford said in an email.

According to the opinion, Peters participated in the Mars health plan. Mars hired Aetna as its claims administrator, and Aetna hired Optum to negotiate and bill for physical therapy and chiropractic services.

Aetna’s agreement with Mars allowed it to outsource the work, but at its own expense. Peters' lawsuit, filed in federal court in North Carolina in 2015, alleged that Aetna and Optum developed the dummy code arrangement to get around that provision.

The lower court ruled in Aetna and Optum’s favor in 2019, finding no evidence that the arrangement cost the plan or its participants any money.

The 4th Circuit agreed that Peters herself had not lost money, due to the Mars plan’s co-pay and co-insurance limits. However, she “produced sufficient evidence to create a genuine issue of material fact” as to whether the arrangement violated Aetna’s fiduciary duties to the plan and its participants, and whether Optum was an “interested party” who engaged in a prohibited transaction, Circuit Judge G. Steven Agee wrote for the appellate panel.

Peters’ evidence included correspondence showing Aetna literally told Optum to “bury” its fees by using a dummy code, and that Optum helped Aetna “scout” for a usable dummy code — specifically, one that was infrequently used for legitimate billing but “still … considered valid,” Agee wrote. He was joined by Circuit Judges Henry Floyd and Stephanie Thacker.

Aetna and Optum decided on Current Procedural Terminology (CPT) Code 97039, the code for “unlisted physical therapy modalities.”

“Critically, CPT codes only describe health care procedures and services,” and there are no “‘catch-all’ or ‘miscellaneous’ codes that can serve as a label for whatever … (Aetna) elect(s) to charge a member and their plan,” Agee wrote, quoting directly from the AMA’s amicus brief.

AMA Senior Assistant General Counsel Leonard Nelson, who co-authored the brief for the organization and the Medical Societies of Maryland, North Carolina, South Carolina and Virginia, declined to comment Tuesday.

The case is Peters v. Aetna Inc et al, 4th U.S. Circuit Court of Appeals, No. 19-2085.

For Peters: D. Brian Hufford of Zuckerman Spaeder; David Wilkerson of Van Winkle Law Firm

For Aetna: Earl Austin of Baker Botts and E. Thomison Holman of Holman Law

For OptumHealth Care Solutions: Brian Boone and Michael Hoernlein of Alston & Bird

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