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Aetna claimed this summer that it was pulling out of all but four of the 15 states where it was providing Obamacare individual insurance because of a business decision — it was simply losing too much money on the Obamacare exchanges.
Now a federal judge has ruled that that was a rank falsehood. In fact, says Judge John D. Bates, Aetna made its decision at least partially in response to a federal antitrust lawsuit blocking its proposed $37-billion merger with Humana. Aetna threatened federal officials with the pullout before the lawsuit was filed, and followed through on its threat once it was filed. Bates made the observations in the course of a ruling he issued Monday blocking the merger.
Aetna executives had moved heaven and earth to conceal their decision-making process from the court, in part by discussing the matter on the phone rather than in emails, and by shielding what did get put in writing with the cloak of attorney-client privilege, a practice Bates found came close to "malfeasance."
Source:
http://www.latimes.com/business/hiltzik/la-fi-hiltzik-aetna-obamacare-20170123-story.html
At what point does arbitrarily screwing with the healthcare of millions of people rise to the level of criminality?
(Score: 4, Insightful) by sjames on Tuesday January 24 2017, @07:13PM
It's not at all unusual for a corporation (particularly one with large cash reserves) to make a move that costs profit in the very short term in the hopes of making a larger profit later. Further, it can hardly be considered punishment if they take the step voluntarily, especially when they also violate the law to do it.
For example, dumping. That is, selling below cost long enough to drive a competitor from the market.
In the case of Aetna, the judge found evidence that they were making money in those exchanges they withdrew from and then perjured themselves by claiming they weren't. Here's a key point, perjury is a crime.
(Score: 2) by requerdanos on Tuesday January 24 2017, @07:22PM
Thanks. I can't read TFA because they reject adblock users, which is fair enough, as it is their site and they may of course do what they like with it.
(Score: 3, Informative) by AthanasiusKircher on Tuesday January 24 2017, @08:07PM
In the case of Aetna, the judge found evidence that they were making money in those exchanges they withdrew from and then perjured themselves by claiming they weren't. Here's a key point, perjury is a crime.
While perjury is a crime, I don't believe the judge claimed that Aetna had actually committed perjury here. I skimmed the relevant sections of the ruling, and even TFA notes:
As for Aetna’s claimed rationale for withdrawing from all but four states, Bates accepted that the company could credibly call it a “business decision,” since the overall exchange business was losing money; he just didn’t buy that that was its sole reason.
It sounds like, at best, Aetna executives could be guilty of concealing relevant evidence during discovery or something, but I'm not sure there's an actual claim of perjury here -- just that the executives weren't telling the whole story (and the most relevant one for the counties in question for the merger).
Moreover, the judge did NOT find "they were making money in those exchanges they withdrew from." To the contrary, from the ruling (pp. 136-137):
The Court has no reason to doubt the financial information that Aetna presented, but it is not persuaded that this information explains why Aetna withdrew from the 17 counties identified in the complaint. The Court is persuaded that this financial information led Aetna to begin the process of rethinking and reducing its exchange footprint. [...] t is even possible that, in the absence of this lawsuit, Aetna might have considered whether to continue its exchange participation in some counties in Florida, Georgia, and Missouri. But the documents that team put together clearly show that they did not approach the 17 complaint counties as part of the business decision. Those three states were not mentioned in the draft documents before the request to include the 17 counties. And once those counties were included in the recommendation documents, they were a separate bloc not evaluated by the same business criteria (e.g., profitability) as the other markets. Hence, while Aetna puts on a persuasive case that information received in July 2016 changed the value proposition for Aetna participating on the exchanges generally, the Court nonetheless finds on the basis of all the evidence that Aetna’s decision with respect to the 17 complaint counties was not based on that value proposition.
Basically, what happened (as far as I can piece together from skimming the ruling) is this:
(1) Aetna was losing money in the exchanges, but it had previously displayed commitments to a strategy that it would make money long-term with them, so it continued to invest in them (and planned future expansion).
(2) Aetna became aware that it was losing much more than was expected in the exchanges, and it began plans to decrease its investment there.
(3) The prospect of the merger came along, but the DOJ threatened to block the merger, and Aetna threatened to pull out of the exchanges.
(4) After this discussion of the merger, suddenly areas in 3 states (17 counties) that hadn't been previously mentioned in the strategic plans to downsize the exchange investments were now added (and apparently not evaluated by the detailed criteria the other areas had been in the strategic plan). They were separated out in their own bullet point, and apparently leaving the exchanges there was not up for discussion (as opposed to the other parts of the downsizing).
(5) Aetna didn't present evidence that they considered profitability or non-profitability in these 17 counties, and THAT was the issue. Also, while I haven't read all the details, it seems that at best Florida may have been making some money (or at least some areas of it), though it's unclear from the parts of the ruling I skimmed whether that "profitability" had actually been attained or simply was expected to in the next year or two.
The judge therefore found that Aetna WAS losing money and WAS acting in part to protect its investments by downsizing. However, the judge also found that Aetna expanded its downsizing plan in specific ways after the merger discussions that don't seem to have followed the same procedure. And the new areas marked for downsizing not only were convenient for the merger but ALSO had been places Aetna was considering in expanding in anticipation of FUTURE revenues.
So, it's a lot more complicated than simply "Aetna perjured itself and lied." In fact, the ruling indicates that Aetna executives were forthcoming in sometimes surprising ways, even admitting in testimony that they were trying not to "make a paper trail" when discussing Florida. Rather Aetna basically took advantage of a strategic downsizing initiative that was apparently already underway to also facilitate the merger and improve its legal position.
(Score: 2) by AthanasiusKircher on Tuesday January 24 2017, @08:18PM
I just found the relevant passage in the ruling (p. 130). Of the three states in question (Florida, Georgia, and Missouri) that encompassed the 17 complaint counties, Florida was already profitable and expected to continue to be so. Georgia and Missouri were not profitable. The question of whether the states in question were profitable was not necessarily relevant to the ruling, only that the profitability criteria apparently were not debated in these newly added states... rather, they were just added to the list for leaving the exchanges. (Admittedly, leaving a profitable Florida entirely, rather than specific areas that were unprofitable or something, probably created more suspicion about this whole matter in the ruling.)
(Score: 2) by sjames on Tuesday January 24 2017, @10:13PM
The pages around that did state that Aetna left the exchanges to improve it's position in the lawsuit rather than due to profitability.
(Score: 2) by dry on Wednesday January 25 2017, @02:54AM
While perjury is a crime, it is very hard to get a conviction.
(Score: 2) by sjames on Wednesday January 25 2017, @08:31AM
Yes, it is. That doesn't make Aetna's actions any less slimy.
(Score: 2) by dry on Friday January 27 2017, @02:47AM
Yes, and at least here (Canada), miss-leading the court is also a crime that, while not as serious, is easier to get a conviction for and is sometimes pursued and perhaps should have been here.