Aetna’s Ex-Settlement Admin Cuts Deal To End Privacy Case

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By Dorothy Atkins, LAW 360

April 20, 2020

Law360 (April 20, 2020, 3:04 PM EDT) — Aetna Inc. has reached a deal to resolve its lawsuit alleging a settlement administrator revealed the HIV status of more than 10,000 Aetna members through a bungled class action settlement mailing, according to filings in California federal court.

In a joint notice Friday, Aetna and the El Segundo, California-based administrative-support services entities, Kurtzman Carson Consultants and KCC Class Action Services LLC, informed U.S. District Judge John F. Walter that they had reached a settlement in principle and that Aetna plans to voluntarily dismiss the litigation, with each party bearing its own costs.

“The parties’ respective counsel will prepare the settlement documents and the stipulation for dismissal of this consolidated action, which will be filed with the court after the execution of the settlement agreement,” the notice says.

Details of the deal were not disclosed.

Aetna’s claims stem from putative class actions initially lobbed by law firm Whatley Kallas LLC and Consumer Watchdog that accused the Hartford, Connecticut-based insurance company of violating the privacy rights of HIV-positive members by requiring that they receive their medications through the mail.

The underlying cases were ultimately settled without certification of any classes, and Aetna agreed as part of the deal to send out notices to HIV-positive subscribers informing them about new procedures for how to fill their prescriptions.

But when notices went out to approximately 12,000 Aetna members, court records say they were contained in windowed envelopes that made the phrase “HIV medications” visible below the recipient’s name.

This prompted its own string of class actions, which Aetna resolved with a $17 million settlement in January 2018.

Aetna then sued Kurtzman Carson a month later in Pennsylvania federal court, and launched a second case against Whatley Kallas and Consumer Watchdog in May 2018. It also filed a substantially identical case in California state court, which was dismissed by a trial court.

In April 2019, a Pennsylvania federal judge moved Aetna’s lawsuit against Kurtzman Carson to California, noting that California is where the bulk of the work on the botched settlement had taken place.

In July, Kurtzman Carson asked Judge Walter to throw out the case, arguing that Aetna’s claims are barred by the terms of their contract and by the voluntary payment doctrine, since Aetna’s settlement payments were voluntary.

But Judge Walter refused to dismiss the suit, concluding that the issues Kurtzman Carson raised are more appropriately resolved on a motion for summary judgment. In October, the judge also agreed to consolidate the case with another suit involving Kurtzman Carson’s related entity, KCC Class Action Services, which disputed that it sent out the letters at issue.

In March, the parties filed dueling motions for summary judgment, and after a hearing on April 6, the judge took the motions under submission, according to the docket. But before the judge could rule on the motions, the parties notified him Friday that they struck a settlement to end the case.

Counsel and representatives for Aetna, Kurtzman Carson and KCC didn’t immediately respond Monday to requests for comment.

Aetna is represented by Frederick Santarelli and Thomas Elliott of Elliott Greenleaf PC, and Matthew Kanny, Craig Rutenberg and Kishan Hasmukh Barot of Manatt Phelps & Phillips LLP.

KCC Class Action Services LLC and Kurtzman Carson Consultants LLC are represented by Blaine C. Kimrey, Jeanah Park, Bryan Clark, Marie E. Christiansen and Anthony Pacheco of Vedder Price LLP.

The case is In re: Aetna Inc. Litigation, case number 2:19-cv-04035, in the U.S. District Court for the Central District of California.

–Additional reporting by Matt Fair. Editing by Marygrace Murphy.

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