Kraft Heinz Sues Aetna for Violating Fiduciary Duty, Improperly Paying Providers for Medical Services

Kraft Heinz Co. has filed an ERISA lawsuit against Aetna Inc. in a Texas federal court. Aetna provides claims processing and adjudication services for Kraft Heinz, which self-funds its employees’ and retirees’ medical expenses. Under ERISA, Aetna has a fiduciary duty to properly identify, deny, and prevent the payment of any provider claims that are false or improperly submitted.

Kraft Heinz claims that Aetna violated its fiduciary duty in paying more than $1.3 million in improper claims that it never should have paid, including many duplicate claims. The company also alleges that Aetna fails to properly monitor the claims because the company is self-funded, instead prioritizing traditional medical insurance clients.

Furthermore, Kraft Heinz claims that Aetna must preserve and disseminate certain claims data under the Health Insurance Portability and Accountability Act (HIPAA). When Kraft Heinz requested the data from Aetna, the company delayed providing it for a year and only provided very limited and incomplete data.

Kraft Heinz also claims that Aetna adds hidden costs to benefit itself, often through “cross-plan offsetting.” Aetna allegedly overpays one medical provider using funds from one of its clients. The company then “corrects the error” by deducting an overpayment from the next payment to the provider. However, this subsequently reduced payment may come from a different Aetna client altogether. This practice causes the initial Aetna client to overpay the medical provider and never receive reimbursement for the overpayment. Instead, a different client receives credit for the overpayment, even though it is not owed an overpayment.

Another tactic to charge hidden fees is the use of repricing companies. Aetna allegedly hires a repricing company to negotiate a lower rate when it receives a claim for an out-of-network provider. One such repricing company is Global Claims Services, which Kraft Heinz claims that Aetna owns. Aetna thus pays a fee to Global Claims Services, which is its own company, and passes that fee on to Kraft Heinz.

The case is The Kraft Heinz Co. Employee Benefits Administration Board v. Aetna Life Insurance Co. Kraft Heinz is seeking a preliminary injunction compelling Aetna to provide all the claims data required to maintain under HIPAA. The company is also seeking a judgment against Aetna for the losses it has incurred because of Aetna’s prohibited transactions and an order that Aetna be disgorged of any profits from those transactions.

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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