Kraft Heinz Plan Committee Brings ERISA Claims Against Aetna as TPA for Health Plans

The benefits committee board of the Kraft Heinz Company (the Committee) has sued Aetna Life Insurance Company (Aetna), claiming that Aetna violated ERISA in numerous ways when serving as third-party administrator (TPA) to two of the company's self-funded group health benefit plans. Kraft Heinz Co. Employee Benefits Administration Bd. v. Aetna Life Ins. Co., (No. 2:23-cv-00317, June 30, 2023, E.D. Tex.). This case is one of a growing number of lawsuits against TPAs involving who owns or has a right to access a plan's medical claims and payment data and what types of TPA activities are covered under ERISA's fiduciary duty provisions.

In the complaint, the Committee alleges that Aetna violated ERISA in refusing to turn over all requested plan data associated with the processing, adjudication, and payment of claims for Kraft Heinz employees, retirees, and their families, which the complaint avers "is owned by" Kraft Heinz. According to the complaint, "Aetna merely has the 'right to use' that information" under its Administrative Services Only (ASO) agreement with the company. The Committee asserts that Aetna approved millions of dollars in claims with missing or incomplete medical procedure codes and may have improperly charged the plans for subcontractor fees not permitted under the parties' ASO contract. The Committee claims it needs the claims data to monitor and assess "Aetna's handling of funds and associated payment integrity." 

The Committee further alleges that Aetna has taken and continues to take steps to conceal its misconduct, claiming that "Aetna's contractual audit provisions deprive the Plans of any visibility into... improperly processed but unaudited claims" and that Aetna "prevents plaintiffs from learning how much Aetna actually pays providers." According to the complaint, Aetna also improperly thwarted attempts by Kraft Heinz to obtain its plan data from its benefits broker, Willis Towers Watson, and from claims clearinghouses. These acts and omissions serve, in part, as the basis for the Committee's ERISA breach of fiduciary duty and prohibited transaction claims against Aetna.

The complaint also takes aim at Aetna's processing of in-network and out-of-network claims. According to the Committee, Aetna violates ERISA when it uses its leverage over providers to pay them less than in-network contracted rates, without passing back to Kraft Heinz the spread between what the plans pay and what the providers receive. The complaint alleges that Aetna violates ERISA when repricing out-of-network claims, both by using some of the payments from the plans to offset fees it pays to the repricing companies and by failing to refund or credit to the plans the amount the repricing companies save in provider payments. These claims raise fundamental legal questions about the breadth of Aetna's fiduciary duties as a TPA and whether the monies at issue are ERISA plan assets at the time Aetna allegedly engaged in the objected to conduct.

The complaint includes additional charges that Aetna's alleged practice of cross-plan offsetting, which the Committee claims benefits Aetna and its insured plans at the expense of self-funded plans like those of Kraft Heinz, violates ERISA, and faults Aetna for comingling the Kraft Heinz plans' funds with funds of Aetna and other plans. It claims Aetna applies less rigorous claims adjudication and fraud detection standards to self-funded plans compared to those applied to Aetna's insured plans, in violation of its fiduciary duties. The Committee objects to Aetna's alleged use of undisclosed agreements with certain network providers that limit the level of scrutiny Aetna applies to the provider claims that are ultimately paid for by the Kraft Heinz plans.

As the case proceeds, the parties and the court will need to address novel questions about health plan administration, including plans' and plan fiduciaries' rights to claims and payment data beyond what is provided for in TPA service provider agreements, whether TPAs are dealing with plan assets once plans pay them to fund benefits at rates set forth in those contracts, and how much of a TPA's business activities are covered by ERISA's fiduciary duty protections. ERISA-covered health plans, employers, plan fiduciaries, insurance companies, and TPAs should keep a close eye on this case as it unfolds.

Upcoming Speaking Engagements and Events

Joanne Roskey and Anthony Shelley will present, "Discussion with EBSA: Enforcement & Regulatory Priorities Impacting Health Plans," at the BCBS 2023 Law, Audit, Compliance & Ethics Conference on August 9, 2023.

The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing.

This, and related communications, are protected by copyright laws and treaties. You may make a single copy for personal use. You may make copies for others, but not for commercial purposes. If you give a copy to anyone else, it must be in its original, unmodified form, and must include all attributions of authorship, copyright notices, and republication notices. Except as described above, it is unlawful to copy, republish, redistribute, and/or alter this presentation without prior written consent of the copyright holder.