Aetna Settles N.J. Class Action Over Coverage Denial of Eating Disorders

Copyright 2008 A.M. Best Company, Inc.All Rights Reserved BestWire

June 3, 2008 Tuesday 04:51 PM EST

459 words

Aetna Settles N.J. Class Action Over Coverage Denial of Eating Disorders

Fran Lysiak

NEWARK, N.J.

Aetna Inc. has agreed to settle a federal class-action lawsuit alleging denial of coverage for the treatment of eating disorders. It may be the first class-action settlement in which a health insurer in New Jersey agreed to cover eating disorders such as anorexia nervosa and bulimia under the same terms and conditions as biologically based mental illnesses, according to court documents.

Aetna is to reimburse $250,000 to about 100 class members for claims it denied over the past seven years based on its policy limitations for non-biologically based mental illnesses. The settlement, if approved by the U.S. District Court in Newark, will affect Aetna insureds who may suffer from eating disorders in the future.

Class member attorney Bruce Nagel called it a "landmark settlement that will benefit many families whose loved ones are suffering from eating disorders." Although Aetna covered treatments related to eating disorders, including hospitalization, outpatient treatment, psychotherapy and nutritional counseling, many Aetna plans imposed benefit maximums on these treatments, according to a statement from his firm, Nagel Rice in Roseland, N.J.

The named plaintiffs in the case are Francis DeVito and Jeff Meiskin, who are covered by Aetna insurance policies governed by the Employee Retirement Income and Security Act of 1974. Both have daughters who suffered from eating disorders and both sought coverage for treatment of their daughters' eating disorders under their policies. DeVito sought coverage, which, on at least one occasion, Aetna denied as not medically necessary. Meiskin was provided benefits for treatment of his daughter's eating disorders, but coverage was cut off when it exceeded the contractual limitations for coverage of non-biologically based mental illnesses -- a classification the plaintiffs disagreed with (BestWire, March 4, 2008).

Aetna agreed to reprocess and pay previously denied claims, remove benefit limitations applicable to non-biologically based mental illnesses and set up an enhanced appeals procedure for the denial of benefits, according to court documents. For the next four years, Aetna agreed to allow any insureds to choose an eating disorder specialist to review and decide adverse medical necessity determinations.

A spokesperson with Aetna (NYSE: AET) declined comment, saying the settlement hasn't yet been approved. Aetna also will pay $350,000 in attorneys fees and costs.

The Aetna settlement is a model for others suits against health insurers over their denial of benefits for eating disorders, according to Nagel. He said he has a similar case pending against Horizon Blue Cross Blue Shield of New Jersey.

(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])

June 4, 2008