Kansas Attorney General Kris Kobach filed a state court lawsuit against Aetna on June 24. The suit accuses the insurer of misusing tens of millions of dollars while it managed the state employee health plan. Aetna has acted as the plan’s third-party administrator since at least 2014. State officials are pursuing relief under the Kansas False Claims Act.
A Pattern of Self-Interest, State Claims
The complaint paints a picture of repeated misconduct. It states that Aetna used its delegated discretion to benefit its own finances instead of protecting the health plan. This language sets the tone for the broader case Kansas is building.
What the Lawsuit Alleges
The lawsuit centers on three core practices: cross-plan offsetting, questionable repricing fees, and the concealment of commingled funds. Each allegation, taken together, paints Aetna as prioritizing profit over its fiduciary duties to the state.
Cross-Plan Offsetting: A Repeat Allegation
Kansas claims Aetna engaged in cross-plan offsetting. This means the insurer allegedly pulled funds from one health plan to recover overpayments tied to a separate plan, all without proper disclosure or consent. Notably, this isn’t a new accusation against Aetna. A federal judge in New Jersey already ruled in 2021 that Aetna violated the Employee Retirement Income Security Act through this same practice.
Amber Smith, Kansas’ deputy attorney general for the public protection unit, emphasized the significance of the case. She noted that Kansas is the first state to sue Aetna specifically over misuse of state health plan dollars. However, she added that private lawsuits have previously found Aetna’s offsetting scheme to violate its fiduciary duty to customers.
Repricing Practices Under Scrutiny
Beyond offsetting, the lawsuit also challenges Aetna’s repricing methods under its National Advantage Program. According to the complaint, Aetna routed claims through third-party algorithms, including those from MultiPlan (now operating as Claritev), to generate reimbursements that fell below billed charges.
The state alleges that Aetna then kept a portion of these “savings” alongside its repricing vendors. Crucially, Kansas claims these fees came directly from state employee health plan assets rather than from Aetna’s standard administrative fee. As a result, the combined fees paid to Aetna and its vendors reportedly exceeded what providers actually received.
Concealment and Commingled Funds
The complaint further alleges that Aetna concealed its practices and commingled plan funds. According to Kansas, this concealment enabled the other schemes to continue undetected for years, compounding the financial harm to the state plan.
What Kansas Is Seeking
Kansas is pursuing several forms of relief through the courts. The state wants treble damages and civil penalties of up to $11,000 per violation. Additionally, officials are seeking disgorgement of misused funds, a full accounting of the plan’s assets, and a permanent injunction to stop the alleged practices going forward.
While Kansas estimates the financial exposure reaches the tens of millions of dollars, officials acknowledge the full scope remains unclear. They say discovery will be necessary to determine the complete extent of the alleged misuse.
Aetna and Claritev Respond
Aetna firmly denied the allegations in a June 29 statement. The company emphasized its commitment to safeguarding taxpayer-funded dollars and stated it would defend itself vigorously against the claims.
Claritev, formerly MultiPlan, also responded despite not being named as a defendant. A company spokesperson rejected any suggestion that its solutions unlawfully suppress provider reimbursement. The spokesperson further denied any inference of coordination with other healthcare cost management vendors, stating that Claritev does not set reimbursement rates, decide coverage, or make final payment decisions for clients.
What Comes Next
This case marks a notable escalation in scrutiny over third-party administrator practices in state health plans. As discovery unfolds, the lawsuit could set a precedent for how other states evaluate their own contracts with large insurers. Stakeholders across the payer industry will likely watch closely, since the outcome may influence future TPA agreements nationwide.
