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Aetna slapped with shareholder lawsuit over ACA exchange exits

Greenbeard

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Ugly. Aetna's decision to pull out of marketplaces where it was making a profit in order to strengthen its hand in its then-ongoing antitrust suit may be coming back to haunt it. Again.

Aetna slapped with shareholder lawsuit over ACA exchange exits
Aetna's 2016 decision to drastically scale back its participation on the Affordable Care Act's insurance exchanges continues to haunt the insurer almost a year later.

Hartford, Conn.-based Aetna was hit with a shareholder lawsuit this week that accuses its board of directors of breaching its fiduciary duties to the company and its shareholders by making false statements about the insurer's reasons for pulling out of exchanges in 11 states.

The Allegheny County Employees' Retirement Fund—an Aetna stockholder—alleges that Aetna's retreat from the exchanges was not a "business decision," as the insurer claimed, but a move to better its chances of closing a $37 billion merger with Humana that ultimately failed.

The complaint, filed in Pennsylvania state court, says that Aetna's alleged conduct, which came to light during its legal battle to acquire Humana, has caused the company financial harm and damaged its reputation. Moreover, the lawsuit claims that Aetna chose to forgo profits "simply to make good on their wrongful threats to the government."

"The real reason that Aetna withdrew from the exchanges was to retaliate against the government for its attempt to block the Aetna-Humana merger and, moreover, the public exchanges in multiple states from which Aetna withdrew were actually profitable for the company," the complaint said.
U.S. District Judge John D. Bates, who blocked Aetna's merger with Humana in January, first made the accusation that Aetna used its participation on the exchanges as a form of leverage to close its merger.

He claimed in his written opinion that Aetna leadership made good on repeated threats to the U.S. Justice Department and then-HHS Secretary Sylvia Mathews Burwell to curtail its participation in the exchanges if the merger were blocked. The shareholder lawsuit filed this week cited Bates' opinion as proof that Aetna misrepresented its reasons for exiting the ACA marketplaces.
 
Ugly. Aetna's decision to pull out of marketplaces where it was making a profit in order to strengthen its hand in its then-ongoing antitrust suit may be coming back to haunt it. Again.

Aetna slapped with shareholder lawsuit over ACA exchange exits

I don't quite understand, why a company shouldn't make the decision to quit a market for any reason. It would have to do it in orderly fashion and honor the covenants of its contracts, but otherwise?
 
I don't quite understand, why a company shouldn't make the decision to quit a market for any reason. It would have to do it in orderly fashion and honor the covenants of its contracts, but otherwise?

The argument is that management has an obligation to do what is best for the company and its owners(stockholders). If the decision to pull out of the markets was made not in the best interest of the company, but to make good on a threat, as is alleged, then stockholders do have a gripe. I have no idea how good a case those filing the suit have tho.
 
I don't quite understand, why a company shouldn't make the decision to quit a market for any reason. It would have to do it in orderly fashion and honor the covenants of its contracts, but otherwise?

Once again the guy who claims to be a "professional economist" doesn't understand things non economists grasp quite easily. But I do get a kick how you try to throw in "professional economisty" kinda words as you post your pretend confusion.
 
Once again the guy who claims to be a "professional economist" doesn't understand things non economists grasp quite easily. But I do get a kick how you try to throw in "professional economisty" kinda words as you post your pretend confusion.

Interesting. That had little to do with economics and more with business and regulation. True the structures of regulation would be backed up by functional property rights concepts, which is economics, but I doubt you had looked that far.
 
Interesting. That had little to do with economics and more with business and regulation. True the structures of regulation would be backed up by functional property rights concepts, which is economics, but I doubt you had looked that far.

Oh look, more "professional economisty" kinda words as you avoid that fact that one simply had to read the link to understand why shareholders are suing. I guess phrases like "chose to forgo profits " are too complicated for the "professional economist" who doesn't understand the word "bubble" or "subsidy". And that's problem jog, if you want to pretend to be smart, you cant pretend to not understand simple words and phrases because of some blind obedience to the conservative agenda.
 
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