An internal video of Aetna lawyers training claims managers about procedures for denying claims shows the insurer considers liability exposure in determining whether or not to pay a policyholder's claim. According to the video, when faced with claims for identical medical problems, Aetna separates the claims where no damages are available - those subject to the federal Employee Retirement Income Security Act, or ERISA - from non-ERISA claims, where consumers can sue.1 2
- Early in the training, Aetna's in-house counsel Jeffrey Bloomenthal clarifies the difference between ERISA and non-ERISA cases: "we have an obligation, certainly, in a non-ERISA setting, under State law, to conduct what is called a reasonable investigation."3 This statement implies that ERISA claims are void of a "reasonable investigation."
- Dan Weintraub, in the Orange County Register, writes, "Here's the gist: The company won't deny a claim from someone who can sue for these damages unless the firm has first conducted a 'reasonable investigation' of the case. But other claimants can be denied benefits after only a cursory review."4
- On the tape, Aetna attorney Art Palmunen states, "As a practical matter, you really may have to do more on a non-ERISA plan to protect against some of those - the exposure - (indiscernible) we're talking about."5
- The non-ERISA claims, according to the video, are all reviewed by the Specialty Review Team, but ERISA claims can be denied without even going to this extra level of review.
The training tape, along with testimony in Fisher v. Aetna, clearly shows that the burden of proving a claim is payable falls on the consumer- who, in a disabled state, must supply all necessary information to the investigator. Following the U.S. Supreme Court's Pilot Life ruling6 (where ERISA was found to supercede state common law causes of action), Aetna shifted the burden to disabled patients rather than investigating claims themselves.
- Columnist Jane Bryant Quinn, in her Buffalo News article, writes, "ERISA claims are another story. The tape shows that, instead of gathering evidence itself, Aetna tells the sick person to handle it. If he or she doesn't present exactly the proof Aetna wants, or presents it after the final deadline for claims, too bad."7
- Prior to Pilot Life, Aetna investigated nearly 100% of patients' claims, but by February 1997, almost no claims were investigated. Aetna had abolished its claims handling guidelines - leaving analysts without guidance about how to fairly treat claimants. The burden of investigation shifted to the disabled patient, who is often unable to properly document their own file. Industry experts characterized the elimination of the guidelines as outrageous.
- Aetna eliminated field representatives in 1989, and by 1992, had none, according to court testimony. The company increased its claims personnel's case loads 4 to 4.5 times the industry average.
- In the early 1990's, Aetna began asking its analysts to reduce the use of Independent
Medical Exams (IMEs). These are exams by independent doctors to gain another perspective
on whether or not someone is disabled. Instead of IMEs, Aetna placed increasing reliance
on its in-house doctors.
- By the mid 1990's, Aetna was basing evaluations of its analysts in part on their
ability to reduce investigations and reduce payments on claims.
- Further trial testimony indicated that supervisors carefully audit or review all
claims approved by analysts. Denied claims are not reviewed unless appealed or contested
by the claimant.
Long time employees blow the whistle on changes in Aetna's claim investigation procedures. In the video, the adjusters, themselves, express concern over the lack of claims investigation and how difficult it is for a disabled person to handle the investigation burden, particularly when claims personnel are in the best position to gather information and investigate claims.
- Employee: We got to talk reality in the claims department, okay...For 24 years, I've been in the LTD (Long Term Disability) areaÃƒÂ–We used to investigate 100% of our cases practically, and that was called 'overkill.' But now we investigate a far, very tiny percentage of thatÃƒÂ–And what we're finding today is that the claim investigator is, does not have the - because of the 8 or 900 case load versus 200 for competitors, and go out and solicit all theseÃƒÂ–the question is having the time to go out and investigate and work up that file the way it's supposed to be.8
- Trainee: If we're trying to be very specific about what kind of - wouldn't it be better, you know, by law, if it should go to court or whatever, [for the claims handlers] to do the requesting [of medical records] themselves?9
- Another trainee: If you are concerned with all that money going out, why couldn't some of the money be allocated to perhaps set up a special (indiscernible), reviewing these claims (indiscernible) - she has a better handle on, really what our claim load is more so than you do. How come time can't be spent on people that can really go out and research all these medicals that are just sitting there in the file?10
During the video, Aetna lawyers inform claims managers that the company faces large punitive damage awards for improper claims processing in non-ERISA cases where claimants can sue. The lawyers clarify that large damage awards raise public awareness of the ERISA legal disparity, which could bring reform at the federal level. The company instructs claims managers to reasonably investigate non-ERISA claims so they will not have to pay damages in court and highlight the need for reform, thus ending their current shield of legal impunity and lax claims investigations.
- Later in the video, Bloomenthal notes of a new state liability law in Texas, meant to apply to all patients. "In the state of Texas, the State Court - in that scenario, we could be subject to - we'll get into more of this later - to back pay and damages, to punitive damages, to a whole range of extra contractual liability that could be many, many millions of dollars."11
- Dan Weintraub, of the Orange County Register, writes, "As the disussion ensues, a top Aetna lawyer- Jeffrey Blumenthal- seems to realize that what is being said wouldn't sound good if it were ever repeated outside that room. So he offers a disclaimer, suggesting that non-ERISA cases -- those in which the company has liability- get the extra level of review because each of the 50 states has its own laws that the company must be sure are followed."12 On the tape: Blumenthal states, "None of you will ever have to testify, 'Well, you know, we do more in the non-ERISA context than the ERISA context because our lawyers tell us there's punitive damage exposure,'" Blumenthal says. "That would be a cry to Congress to enact legislation to repeal ERISA."13 Weintraub continues, "It would be ironic if Blumenthal's statement- as recorded on Aetna's own tape- becomes the cry that Congress finally heeds."14
1The evidence was under a protective order, that has since been lifted, in Richard, Fisher v. Aetna Life Insurance Co., No. 3AN97-291, Alaska Super., Anchorage. (Transcript available upon request) 125 million workers with private-sector, employer-paid insurance benefits are subject to ERISA. They can receive no damages in disputes over claims payments.
2The video depicts trainings in long-term disability claims, not health insurance claims, but Aetna states its policies do not differ between the two. "Aetna video fuels renewed HMO fight" by Laura Meckler, Associated Press, October 13, 1998, pg. A-6
3Fisher transcript, pg. 16, court reporter corrected
4"Tale of Aetna tape: fear of suit a factor in health claim reviews" by Daniel M. Weintraub, The Orange County Register, October 25, 1998, News, pg. A 04
5"Law Keeps Many Patients From Suing Health Insurers" by Jane Bryant Quinn, Seattle Post-Intelligencer, November 24, 1998, Business, pg. C1
6According to the 1987 Pilot Life decision, "State common law causes of action arising from the improper processing of a claim are preempted." Pilot Life v. Dedeaux, 481 U.S. 44 (1987)
7"You Deserve the Right to Sue Greedy Insurers that Unreasonably Deny Health, Disability Claims" by Jane Bryant Quinn, Buffalo News, November 22, 1998, Business section, pg.13B
8The evidence was under a protective order, that has since been lifted, in Richard Fisher v. Aetna Life Insurance Co., No. 3AN97-291, Alaska Super., Anchorage. (Transcript available upon request) 125 million workers with private-sector, employer-paid insurance benefits are subject to ERISA. They can receive no damages in disputes over claims payments.
9Fisher transcript, p. 43
10Fisher transcript, p. 56-57, court reporter corrected
11Fisher transcript, p. 16-17, court reporter corrected
12"Tale of Aetna tape: fear of suit a factor in health claim reviews" by Daniel M. Weintraub, The Orange County Register, October 25, 1998, News, pg. A 04
13Fisher transcript, pg. 59, court reporter corrected
14Weintraub, pg. A04