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California Begins Investigation of Aetna's Coverage Practices

by Precise Leads

February 27, 2018

Comments from Aetna’s former medical director in Southern California regarding his coverage decisions have sparked probes in four states.

An admission by Aetna’s former Southern California medical director that he never personally reviewed patients’ medical files before making a decision to continue or withhold care has prompted four states to launch investigations into the insurer’s coverage practices.

California’s Insurance Commissioner Dave Jones was the first to announce his probe into Aetna’s actions. “If the health insurer is making decisions to deny coverage without a physician actually ever reviewing medical records, that's of significant concern to me as insurance commissioner in California — and potentially a violation of law,” Jones said in a statement.

Soon after, Colorado, Washington State, and Aetna’s home state of Connecticut followed California’s lead and announced that they would also look into the matter. Aetna is the country’s third largest health insurer, serving more than 23 million customers.

Deposition During Lawsuit

California launched its investigation after CNN reported on a deposition by Dr. Jay Ken Iinuma, who worked as the medical director for Aetna in Southern California between March 2012 and 2015. His comments came as part of a lawsuit brought against the health insurer by a Southern California resident who alleges that Aetna wrongfully denied him treatment for his autoimmune disorder in 2014.

Under questioning, Dr. Iinuma said that he didn’t personally read the patient’s medical records before making his decision. Instead, he said that he relied on the notes and recommendations submitted to him by nurses. Dr. Iinuma added that he followed Aetna’s procedures in making pre-authorization decisions.

In response, Aetna stated that Dr. Iinuma’s comments were “taken out of context,” and that its medical directors “review all necessary available medical information for cases that they are asked to evaluate. That is how they are trained, as physicians and as Aetna employees.” The health insurer said that it has paid for all of the patient’s treatments since 2014, and that the denial at the heart of the lawsuit occurred because the patient failed to undergo a doctor-ordered blood test.

Jones said that his investigation will review all coverage or pre-authorization denials handed down during Dr. Iinuma’s tenure with Aetna.

Aetna-CVS Deal at Risk?

The investigations come as federal and state regulators are reviewing whether to approve Aetna’s $67.5-billion merger with CVS Health Corp. According to legal experts, however, the inquiries are unlikely to derail the merger.

Andre Barlow, an antitrust lawyer at Washington’s Doyle, Barlow & Mazard, told the National Law Journal that the deal “is in no jeopardy” on the federal level, where regulators focus on the question of how the merger affects competition. State regulators, meanwhile, consider other factors, such as whether the deal is in the public interest, its potential impact on local competition, and the companies’ financial status. Barlow noted that states could use those standards to obtain concessions from the parties that the Department of Justice’s Antitrust Division would not seek.

Shannon Zollo, corporate partner at law firm Morse, Barnes-Brown & Pendleton, told the National Law Journal that the state probes could push CVS to delay the merger or renegotiate the terms. “Let’s just say that if the states concluded that bad things had been occurring and imposed some type of fine or restrictions, the buyer can take the position that they can walk away,” he said. “But if the buyer doesn’t want to walk away, it may use [those adverse developments] to re-leverage conditions or terms.”

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