COOPER v. AETNA HEALTH INC. PA, CORP. et al

Filing 899

OPINION. Signed by Judge Katharine S. Hayden on 8/30/13. (rg, )

NOT FOR PUBLICATION
Civil Action No. 07-3541
MDL No. 2020
In re AETNA UCR LITIGATION

SUPPLEMENAL OPINION
ADDRESSING OBJECTIONS TO
PRELIMINARY CERTIFICATION OF
SETTLEMENT CLASSES AND
PRELIMINARY APPROVAL OF
PROPOSED SETTLEMENT
AGREEMENT

This Document Relates to:
ALL CASES

Katharine S. Hayden, U.S.D.J.
This multidistrict litigation arises out of the insurance industry’s use of allegedly flawed
databases licensed from Ingenix, Inc., a wholly-owned subsidiary of UnitedHealth Group.
According to the lawsuits against Aetna and similar actions filed against other insurers using
Ingenix, medical services rendered by out-of-network providers were systematically underreimbursed.

Several plaintiffs entered into negotiations with Aetna, and, after extensive

discovery, motion practice, and 13 in-person mediation sessions, an agreement was reached to
settle the matter for $120 million.
The settling parties filed a joint motion for preliminary approval of the settlement
agreement, preliminary certification of the settlement classes, and approval of the form and
manner of notice to the settlement classes. [D.E. 839.] UnitedHealth Group and Ingenix, and six
plaintiffs have opposed this motion. [D.E. 841, 843.] The Court reviewed the parties’
submissions and heard from the proponents and opponents during lengthy oral argument on July
15, 2013 and July 23, 2013. [D.E. 883, 891.] Having fully considered the settling parties’ joint
motion for preliminary approval of the settlement classes, the arguments made in opposition to
preliminary approval, and after examining the lengthy docket in this matter, the Court is satisfied
that preliminary approval of the proposed settlement classes and class notice provisions is
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appropriate.

The Court’s findings and a schedule for the final approval hearing and

administration of class notice are set forth in the accompanying order. [D.E. 898 (“Prelim.
Approval Order”).]

This opinion addresses the objections raised by the opponents to the

proposed settlement and certification of the proposed classes.
I.

BACKGROUND
Plaintiffs fall into two categories: members of Aetna’s healthcare insurance plan

(“subscriber plaintiffs”) and physician and non-physician out-of-network providers (“provider
plaintiffs”). [Compl. ¶¶ 12, 50.]1 These subscribers and providers allege that Aetna used
databases licensed from Ingenix to set usual, customary, and reasonable (“UCR”) rates for outof-network services knowing that the data was inherently flawed. Aetna’s use of this data
resulted in artificially reduced reimbursements to plaintiffs. [See generally id. at ¶¶ 5, 8, 10,
150-152.] To that end, plaintiffs allege the existence of “a secret and illegal agreement by Aetna,
UnitedHealth Group, Ingenix, and most of the country’s largest health insurers to systemically
under-reimburse consumers for [out-of-network services]” in violation of ERISA, RICO, and the
Sherman Act, as well as state law. [Id. at ¶ 5 & Section XIII.]
II.

PROCEDURAL HISTORY
On April 8, 2009, the Judicial Panel on Multidistrict Litigation consolidated Cooper v.

Aetna Health Inc., No. 07-3541, which was originally filed in this district and assigned to Judge
Faith Hochberg, with Weintraub v. Ingenix, Inc., No. 09-2027, originally filed in the District of

1

In their brief, the UnitedHealth and Ingenix defendants stated that the parties disagree over
whether the first or the second consolidated amended complaint is the operative complaint.
[D.E. 841 (“United Defs.’ Opp.”) at 3, n.1.] When probed during oral argument, counsel
confirmed that this was a quality control—not substantive—issue. [Prelim. Hr’g Tr. Day 2 at
8:1-9:18.] The factual bases laid out in both complaints are nearly identical. As such, “Compl.
¶ __” refers to the applicable paragraph(s) in both the first and the second consolidated amended
complaints – D.E. 219, 319.
2

Connecticut, under MDL No. 2020. In June of 2009, Judge Hochberg consolidated other related
actions filed in this district and instructed the various plaintiffs to file a single consolidated
amended complaint under the caption “In re: Aetna UCR Litigation, MDL No. 2020.” [D.E. 212
(“CMO No. 1”).] After the consolidated complaint was filed, Judge Hochberg fielded proposals
for choosing a leadership structure for counsel from the several law firms representing the
consolidated plaintiffs. Ultimately, Judge Hochberg issued a Case Management Order that
empaneled the “Aetna Plaintiffs’ Executive Committee” to streamline case management, setting
forth the duties of each respective firm. [D.E. 236 (“CMO No. 2”).] Under CMO No. 2, Judge
Hochberg designated the Carella Byrne law firm to serve as settlement liaison responsible for
organizing and coordinating settlement negotiations on behalf of plaintiffs. [Id. at ¶ 3.]
Thereafter, the parties continued to litigate the action, with defendants filing a motion to
dismiss and plaintiffs filing a motion for class certification – both of which were fully briefed.
[See, e.g., D.E. 249, 269-270, 288, 428, 454, 510-511, 548, and 579.] Even while the docket
remained active, the parties began to engage in settlement discussions, selecting retired United
States District Judge Nicholas H. Politan to serve as a mediator. At his direction, the parties
exchanged information about potential damage calculations. [Jan. 14, 2013 Certification of
James E. Cecchi (“Cecchi Cert.”) at ¶¶ 7-8; Prelim. Hr’g Tr. Day 1 (Cecchi) 13:1-4.] Coincident
with the parties’ efforts to settle the matter by mediation, Judge Hochberg administratively
terminated the motion to dismiss and the motion for class certification, with the caveat that they
could be reactivated if the settlement talks became unproductive. [D.E. 595.] Following a status
conference held October 18, 2010, Judge Hochberg ordered the parties to refile their motions and
held oral argument on the motion to dismiss. [D.E. 622, 624-626, 634-637, 761 (Oral Arg. on
625 motion to dismiss – decision reserved).] Notwithstanding, during this same period Judge

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Politan continued to convene in-person mediation sessions in New York and Florida. [Cecchi
Cert. at ¶ 9.]
On June 2, 2011, the case was reassigned to Judge Stanley Chesler. [D.E. 777.] The
parties jointly represented that they wanted to continue pursuing a settlement and agreed that
Judge Chesler should hold any decision on the motion to dismiss in abeyance pending their
discussions. [See D.E. 868 (Chesler Recusal Opinion) at 1.] For the remainder of 2011, the
parties continued to attend in-person mediation conferences with Judge Politan. The 13th and
final mediation session took place on December 7, 2011. [Cecchi Cert. at ¶ 9.]
Exactly one year after that, the settling plaintiffs and Aetna filed the motion for
preliminary approval that is presently before the Court. [D.E. 839 (“Moving Br.”).]2
III.

OVERVIEW OF SETTLEMENT AGREEMENT
A. Settlement Terms
Aetna, four subscribers – John Seney, Jeffrey M. Weintraub, Alan John Silver, and Mary

Ellen Silver, and four out-of-network providers – Dr. Alan Schorr, Dr. Frank Tonrey, Dr.
Carmen Kavali, and Brian Mullins, M.S., P.T., have entered into the settlement agreement before
the Court. [D.E. 839-2 (hereinafter “Settlement Agreement”) at § 1.44; D.E. 847.] Under the
terms, Aetna will pay $60 million to a general settlement fund. [Settlement Agreement at § 9.]
Attorneys’ fees, administration costs, and service payments to the representative plaintiffs will be
paid out of the general settlement fund first. [Id. at §§ 9.2, 11.]3 Upon timely submission of a

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Chief Judge Simandle assigned the case to the undersigned after Judge Chesler discovered that
he had a disqualifying interest in the litigation that had gone unnoticed. [D.E. 868, 871, 873.]
3
“If the Court approves the proposed Settlement, Settlement Class Counsel will apply to the
Court for an award of attorneys’ fees in an amount not to exceed 33 1/3% of the Settlement Fund
and reimbursement of expenses not to exceed $3,000,000. Any attorneys’ fees and expenses
awarded by the Court will be paid from the General Settlement Fund. In addition, Settlement
Class Counsel may apply to the Court for the approval of a service fee to each of the
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claim form, members of the two settlement classes will be entitled to a pre-determined
reimbursement amount from the remainder of the general fund – up to $40 per year that they are
eligible, subject to a pro rata reduction. In addition to the $60 million in the general settlement
fund, Aetna will pay up to an additional $60 million to two prove-up funds -- a subscriber fund
($40 million) and a provider fund ($20 million). [Id. at §§ 10.1, 10.2.]4 Members of each of the
two proposed settlement classes may elect to seek compensation either from the general
settlement fund without supporting documentation, or from the relevant prove-up fund with
supporting documentation establishing timely and valid prove-up claims for reimbursement.
Aetna agrees to make available to the settlement administrator certain claim information for the
relevant class periods to assist claimants in fulfilling the requirements of the prove-up funds.
[See Class Notice, appended as Exh. F to the Settlement Agreement, at Section VI (“Important
Information”).] A claimant who does not qualify for payment in one of the prove-up funds, can
apply to the general settlement fund. [Settlement Agreement at §§ 10.1(d), 10.2(d); see also
“NOTE” in Section B of the Subscriber and Provider Claim Forms, appended to Settlement
Agreement as Exhs. A & B (“Subscriber/Provider Settlement Claims declared ineligible will be
considered for eligibility under the General Settlement Fund”); Class Notice, appended as Exh. F
to the Settlement Agreement, at Section VI (same).]

Representative Plaintiffs not to exceed $20,000 each.” [Notice of Proposed Settlement of Class
Action & Final Settlement Hearing, appended as Exh. F to the Settlement Agreement, at Section
XII; see Prelim. Approval Order at ¶ 21 (setting March 11, 2014 deadline for motion on fees).]
4
If the general settlement fund is not exhausted after payment of all claims, its remaining funds
will be allocated equally between the two funds. If one prove-up fund is exhausted and the other
is not, the remaining general settlement funds will be allocated to the exhausted prove-up. If
either prove-up fund is not exhausted after all eligible claims are paid, up to $5 million of that
fund will be allocated to the other prove-up fund. If either prove-up fund is not exhausted after
all of these allocations, any remainder will remain with Aetna. [Settlement Agreement at §§ 10,
10.1(g), 10.2(g); see also Notice of Proposed Settlement of Class Action & Final Settlement
Hearing, appended as Exh. F to the Settlement Agreement, at Section V(a)(4).]
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In exchange, the settlement classes will provide a broad release of claims against Aetna
and all other released persons. [Settlement Agreement at § 13.] United and Ingenix are not
considered “released persons.” [Id. at § 1.41.]
B. Settlement Classes
The proposed settlement identifies two settlement classes:


Provider Settlement Class = “Persons who, at any time from June 3, 2003 through the

Preliminary Approval Date, (i) were Out-of-Network Health Care Providers or Out-of-Network
Health Care Provider Groups; (ii) provided Covered Services or Supplies to Plan Members; and
(iii) whose resulting claims for reimbursement included Partially Allowed Claims.” [Settlement
Agreement at § 1.37.]5


Subscriber Settlement Class = “Persons who, at any time from March 1, 2001 through

the Preliminary Approval Date, (i) were Plan Members; (ii) received a Covered Service or
Supply from an Out-of-Network Heath Care Provider or Out-of-Network Health Care Provider
Group; and (iii) whose resulting claims for reimbursement included Partially Allowed Claims.”
[Settlement Agreement at § 1.50.]
IV.

DISCUSSION & ANALYSIS
In order to determine if preliminary approval of the proposed settlement classes is

appropriate, the Court must look to Fed. R. Civ. P. 23. First, the proposed classes have to meet
the standard requirements under subsections (a)(1)-(4) (numerosity, commonality, typicality, and

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All capitalized terms are defined in the agreement. [See Settlement Agreement at §§ 1.26, 1.27,
1.14, 1.32, 1.28.] For ease of reference, “Plan Member” means “an individual enrolled in or
covered by a Plan Insured or administered by the Company, id. at § 1.32, and “Partially Allowed
Claim” means “any claim line for a Covered Service or Supply provided to a Plan Member that
is not a Denied Claim and for which the Allowed Amount is less than the amount billed by the
provider,” id. at § 1.28; see also Prelim. Hr’g Tr. Day 2 (Axelrod) 51:1-6. “Partially Allowed
Claims must relate to services provided to a Plan Member by an Out-Of-Network Provider or an
Out-Of-Network Provider Group.” Id. at § 1.28.
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adequacy) and subsection (b)(3) (superiority and predominance).

Second, the court must

determine whether the proposed settlement is “fair, reasonable, and adequate” under subsection
(e). Rodriguez v. Nat’l City Bank, No. 11-8079, -- F.3d --, 2013 WL 4046385, at *5, 8 (3d Cir.
Aug. 12, 2013) (citing Sullivan v. D.B. Invs., Inc., 667 F.3d 273, 296 (3d Cir. 2011) (en banc)).
United HealthGroup and Ingenix (hereinafter “United defendants”) argue that the Court
should not approve the proposed subscriber class under RICO and the Sherman Act because the
commonality and predominance requirements are not satisfied. Six subscriber plaintiffs who
brought ERISA claims against Aetna allege that the settling parties’ agreement should not be
approved because the plaintiffs representing the subscriber class are inadequate and present
claims and issues that are not typical of the absent class members.6 These same plaintiffs also
oppose the Court’s entry of the proposed settlement because, according to them, it does not
satisfy Rule 23(e)’s fair and reasonable requirement. These arguments will be addressed in turn.
A.

United Defendants’ Objection
1. Rule 23(a)(2) & (b)(3) - Commonality & Predominance Requirements7

“A putative class satisfies Rule 23(a)’s commonality requirement if ‘the named plaintiffs
share at least one question of fact or law with the grievances of the prospective class.’”
Rodriguez, 2013 WL 4046358, at *8 (quoting Baby Neal v. Casey, 43 F.3d 48, 56 (3d Cir.
1994)). Recognizing, that “that bar is not a high one,” just this month the Third Circuit stated
that it has “acknowledged commonality to be present even when not all plaintiffs suffered an
actual injury, Baby Neal, 43 F.3d at 56, when plaintiffs did not bring identical claims, In re

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The parties do not dispute that the numerosity requirement in Rule 23(a)(1) and the superiority
requirement of Rule 23(b)(3) are satisfied. [Prelim. Hr’g Tr. Day 1 28:13-18.]
7
The commonality and predominance requirements enumerated in Rule 23(a)(2) and (b)(3) tend
to overlap significantly and are often discussed together. Sullivan, 667 F.3d at 297; Danvers
Motor Co, Inc. v. Ford Motor Co., 543 F.3d 141, 148 (3d Cir. 2008).
7

Prudential, 148 F.3d 288, 311 (3d Cir. 1998), and, most dramatically, when some plaintiffs’
claims may not have been legally viable, Sullivan, 667 F.3d at 305-07.” Id.; see also id. (“[T]he
focus of the commonality inquiry is not on the strength of each plaintiff’s claim, but instead is
‘on whether the defendant’s conduct was common as to all of the class members.’”) (quoting
Sullivan, 667 F.3d at 299).
The predominance inquiry of Rule 23(b)(3), while similar to commonality, imposes a
“more rigorous obligation upon a reviewing court to ensure that issues common to the class
predominate over those affecting only individual class members.” Sullivan, 667 F.3d at 297
(citing In re Ins. Brokerage Antitrust Litig., MDL 1663, 579 F.3d 241, 266 (3d Cir. 2009)); see
also In re Ins. Brokerage Antitrust Litig., MDL 1663, -- F. Supp. 2d --, 2013 WL 3956378, at
*12 (D.N.J. Aug. 1, 2013) (quotation omitted). Third Circuit precedent provides that, as with
commonality, “the focus of the predominance inquiry is on whether the defendant’s conduct was
common as to all of the class members, and whether all of the class members were harmed by
the defendant’s conduct.” Id. at 198; see also In re Ins. Brokerage Antitrust Litig., 579 F.3d at
269 (finding that “whether the named plaintiffs and absent class members were proximately
injured by the conduct of the [ ] defendants is a question that is capable of proof on a class-wide
basis,” and that “the element of antitrust injury–that is, the fact of damages—is susceptible of
common proof, even if the amount of damage that each plaintiff suffered could not be
established by common proof.”).
2. Discussion & Analysis
The settling plaintiffs seek preliminary certification as to all claims pled against Aetna -including their RICO and Sherman Act claims that are also pled against the non-settling United
defendants.

As the Court indicates in its accompanying order preliminarily approving the

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proposed settlement classes, “there are common issues of law and fact for both settlement
classes” that “predominate over questions that may affect only individual members.” [D.E. 898
(“Prelim. Approval Order”) at ¶¶ 8(b); 9(a).] These issues include: “(i) [w]hether Aetna’s use of
the Ingenix databases or its other challenged reimbursement practices with respect to out-ofnetwork services and supplies resulted in artificially reduced payments to settlement class
members; and (ii) [w]hether Aetna’s use of the Ingenix databases or its other challenged
reimbursement practices with respect to out-of-network services and supplies violated ERISA,
RICO, or the Sherman Act.” [Id. at ¶¶ 8(b)(i)-(ii); see also Prelim. Hr’g Tr. Day 1 (Cecchi)
28:20-29:4.]
The United defendants allege that the proposed subscriber class cannot satisfy the
commonality and predominance requirements of Rule 23 for the RICO and Sherman Act claims
because they cannot prove injury and causation using class-wide proofs. [United Defs.’ Opp. at
1, 8 (citing 15 U.S.C. § 15(a); 18 U.S.C. § 1964(c)); see also Prelim. Hr’g Tr. Day 1 (Pace)
56:13-18; 57:2-6.] To that end, the United defendants contend that because the purported injury
is that Aetna reimbursed subscriber class members less for out-of-network services when it used
the Ingenix database, to be a certifiable class the subscriber plaintiffs would have to use classwide proofs to show that the Ingenix databases were skewed downward across the board.
[United Defs.’ Opp. at 1-2.] This, they allege, cannot be done because “to demonstrate underreimbursement, each plan member would have present individualized evidence as to the specific
CPT code/Geozip combination and provider charge percentile from the iteration of an Ingenix
database that Aetna used for his or her [out-of-network] claim and then compare that to what the
plan member contends would be a more accurate corresponding benchmark to satisfy Aetna’s
health plan obligations.” [Id. at 2 (emphasis in original); see also id. at 8-9, 11 (“To come up

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with anything but an ‘average’ ‘probable estimate’ that a particular claim was underreimbursed,
[plaintiffs’ expert] Dr. Siskin would need ‘information about the individual and circumstances of
the individual.” (quoting Siskin Dep. at 60:24-61:21)); see also D.E. 886 (“United PowerPoint”)
at 10-11).] The United defendants conclude that where, as here, individual questions involving
causation and damages predominant over common issues class certification is unsuitable.
[United Defs.’ Opp. at 13-14.]
The settling parties argue that the United defendants do not have standing to challenge
the proposed settlement classes because they are not parties to the settlement.

[D.E. 850

(“Settling Pls.’ Reply to United”) at 2-5; D.E. 851 (“Aetna Reply”) at 12; Prelim. Hr’g Tr. Day 1
(Guglielmo) 49:3-5; 49:19-50:23 (quoting In re Sch. Asbestos Litig., 921 F.2d 1330, 1332 (3d
Cir. 1990) (“To establish standing to appeal a settlement, a non-settling defendant may not
merely claim an interest in the lawsuit but must show cognizable prejudice to the legal
relationship between it and the settling parties.”).]
Generally, “[n]on-settling defendants . . . lack standing to object to a partial settlement,
because they are ordinarily not affected by such a settlement.” Eichenholtz v. Brennan, 52 F.3d
478, 482 (3d Cir. 2007). An exception, however, is recognized when the non-settling defendant
“can demonstrate that they will suffer some formal legal prejudice as a result of the partial
settlement.” Id.; see also In re Nasdaq Market-Makers Antitrust Litig., 176 F.R.D. 99, 103
(S.D.N.Y. 1997) (citing Zupnick v. Fogel, 989 F.2d 93, 98 (2d Cir. 1993)). Indeed, the Third
Circuit has recognized that “[t]here is consensus that a non-settling defendant has standing to
object to a partial settlement which purports to strip it of a legal claim or cause of action” such as
“an action for indemnity or contribution,” or to “invalidate [the non-settling defendant’s]
contract rights.” Id. (citation omitted).

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The settling parties argue that the United defendants do not have standing because they
“have no rights or claims under the settlement that are being impacted, and [because] the
settlement and certification of the claims alleged in the complaint, including the RICO and
antitrust claims, in no way impact their on-going defenses in this action.” [Settling Pls.’ Reply to
United at 2; see also Aetna Reply at 12-13.] The settling parties also perceive “hypocrisy” on
the part of the United defendants because in American Medical Ass’n v. United Healthcare
Corp., 00-cv-2800, 2009 WL 4403185 (S.D.N.Y. 2009), as part of their $350 million settlement,
the United defendants and settling plaintiffs sought and obtained certification of a settlement
class that included ERISA, RICO, and antitrust claims involving “identical challenges to the
Ingenix database.” [Id.; see also Aetna Reply at 3, 15 (citing AMA, slip op. at *3, 6); Prelim.
Hr’g Tr. Day 1 (Guglielmo) 49:6-14; 51:13-22.]8
In response, the United defendants allege that despite not being a member to the
settlement, until their motion to dismiss is decided, they are still facing the claims brought by
subscriber plaintiffs and thus have a direct interest in any decision by this Court to certify a
subscriber settlement class on those claims. [United Defs.’ Opp. at 3.] They contend that “[t]his
is true even if the subscriber settlement class is certified only for the purposes of settlement since
the law is clear that the requirements of Rule 23(b)(3) are very similar as applied to a settlement
class and a ‘merits’ class.” [Id.; see also United PowerPoint at 2 (“The Court ‘must resolve all
factual and legal disputes relevant to class certification, even if they overlap with the merits –
including disputes touching on elements of the cause of action.’”) (quoting In re Hydrogen
Peroxide Antitrust Litig., 552 F.3d 305, 307 (3d Cir. 2008)).] In other words, the United

8

In the alternative, the settling parties argue that the commonality and predominance
requirements are satisfied because several common questions of fact and law predominate over
individual questions. [See Moving Br. at 11-12 (citing In re Prudential, 148 F.3d at 314).]  
11

defendants are concerned about the impact that certifying a settlement class may have on a future
motion for class certification in the remaining litigation. The settling plaintiffs maintain that “a
decision by this Court certifying the RICO and antitrust claims for settlement purposes has no
impact whatsoever on the [United] defendants as any defense they may have or have previously
raised against certification of the RICO and antitrust claims would still exist even if the Court
were to certify such claims as to Aetna.” [Settling Pls.’ Reply to United at 4 (citing In re K-Dur
Antitrust Litig., No. 01-1652, 2007 WL 5297757, at *5, n.7 (D.N.J. Oct. 10, 2007) (“while [ ]
non-settling defendants’ arguments in opposition to certification of a litigation class may bear
upon the class certification issues generally, those defendants lack standing to object to the
proposed settlement and to class certification for settlement purposes.”).]
3. Conclusion
The Rule 23 analysis may include a preliminary inquiry into the merits insofar as the
merits of the claims may be relevant to the class certification analysis. Rodriguez, -- F.3d --,
2013 WL 4046385, at *5-6. But, the Third Circuit has established the parameters of the Court’s
review at this stage in the case and commented on its bearing on the merits: “factual findings of
the court on a Rule 23 motion are restricted to the question of whether the class may be certified
and ‘do not bind the factfinder on the merits.’” Franco v. Cigna, 289 F.R.D. 121, 130 (D.N.J.
2013) (quoting Hydrogen Peroxide, 552 F.3d at 318). Because a determination at this stage does
not bind the Court on the merits, preliminarily approval of the subscriber settlement class does
not affect the United defendants and therefore they lack standing to object.

See, e.g.,

Eichenholtz, 52 F.3d at 482; In re Sch. Asbestos Litig., 921 F.2d at 1332. This is particularly true
when issues that would need to be addressed before claims could be certified for litigation class
treatment, such as manageability at trial, were not considered when addressing the sufficiency of

12

the proposed settlement classes. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997);
see also Prelim. Hr’g Tr. Day 1 (Guglielmo) 52:17-18, 23-25.
Moreover, having reviewed the United defendants’ injury and causation arguments, the
Court is satisfied that it would be more appropriate to consider the viability of plaintiffs’ RICO
and Sherman Act claims against the United defendants in the context of the pending motion to
dismiss.9 The United defendants shall resubmit all previously filed motion papers and may
supplement the submission with any relevant subsequently issued case law. A separate order
will be entered that sets forth a schedule for submissions on the motion to dismiss.
B. ERISA Plaintiffs’ Objection to the Proposed Representative Plaintiffs
1. Rule 23(a) Standard for Adequacy of Proposed Representative Plaintiffs
Rule 23(a)(4) provides that to certify a class, a court must find that “the representative
parties will fairly and adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4).
“The adequacy inquiry under Rule 23(a)(4) serves to uncover conflicts of interest between
named parties and the class they seek to represent.” Larson v. AT&T Mobility, LLC, 687 F. 3d
109, 131-132 (3d Cir. 2012) (quoting Amchem Prods., 521 U.S. at 625).10 “[T]he inquiry has

9

In addition to arguing that the subscriber plaintiffs will not be able to show injury and causation
through use of common proofs, the United defendants contend that some members may not have
incurred out-of-pocket expenses and some members may have subscribed to self-funded plans.
[See United Defs’ Opp. at 26-30.] The United defendants also argue that the settling parties
cannot establish the misrepresentation element of the subscribers’ RICO claims. [Id. at 30-36.]
These issues are also more suitable for consideration in the context of the United defendants’
motion to dismiss. 
10
In their supplemental omnibus brief, the objecting plaintiffs refer the Court to the Larson
decision in a parenthetical that describes the holding as: “vacating the district court approval of a
settlement supported by Carella Byrne and Freed & Weiss on the basis of due process rights of
absent class members and the possible inadequacy of the class representatives.” [D.E. 854
(“Obj. Pls.’ Omnibus Br.”) at 19, n. 3.] But Larson is distinguishable in that the Circuit found
the district court abused its discretion in ruling that it would be unreasonable for the cellular
provider to undertake a search of its own billing records in order to identify class members for
individual notice. As to the adequacy of the class representatives, the Circuit commented
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two purposes: ‘to determine [1] that the putative named plaintiff has the ability and the incentive
to represent the claims of the class vigorously, . . . and [2] that there is no conflict between the
individual’s claims and those asserted on behalf of the class.’” Id. (quoting In re Community
Bank of North Virginia, 622 F.3d 275, 291 (3d Cir. 2010) (ellipsis in original)). This inquiry is
closely tethered to the typicality requirement, Danvers, 543 F.3d at 149, which “is designed to
align the interests of the class and class representatives so that the latter will work to benefit the
entire class through the pursuit of their own goals,” In re Warfarin Sodium Antitrust Litig., 391
F.3d 516, 531 (3d Cir. 2004). See Fed. R. Civ. P. 23(a)(3) (allowing certification if “the claims
or defenses of the representative parties are typical of the claims or defenses of the class”).
2. Discussion & Analysis
In their opposition brief, six ERISA plaintiffs object to the certification of the subscriber
settlement class arguing that the proposed representative plaintiffs – John Seney, Jeffrey
Weintraub, Alan John and Mary Ellen Silver – are inadequate because they are subject to unique
defenses and therefore cannot satisfy Rule 23’s adequacy and typicality requirements. [D.E. 843
(“Obj. Pls.’ Opp.”).] These objecting plaintiffs, who include Michele Cooper, Michele Werner,
Darlery Franco, Paul and Sharon Smith, and Carolyn Samit, allege that they are “the only
subscriber plaintiffs in this matter who are adequate and will protect the due process rights of
absent class members.” [Id. at 1.]
i.

John Seney

On July 31, 2009, Seney’s case was consolidated into MDL 2020 under CMO No. 1.
[D.E. 212; see, supra, p. 2-3.] On September 18, 2009, Seney filed a notice of voluntary

without ruling in Larson that because the representatives were no longer subscribers of the
cellular service they may not be well-suited to represent those class members who remain
subscribers of the service.
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dismissal and on September 21, 2009 Judge Hochberg “dismissed [Seney’s claims] without
prejudice in accordance with Fed. R. Civ. P. 41(a)(1)(A)(i).” [D.E. 255, 256 (emphasis added).]
On December 24, 2009, Seney was named as a subscriber plaintiff in “Section II – Parties” of the
second amended consolidated complaint and his specific claims against the defendants were
described in paragraphs 353 through 358. [D.E. 319.]
Reminding the Court of its “fiduciary responsibility to class members to ensure that all
Rule 23 due process and other requirements have been satisfied,” the objecting plaintiffs allege
that representative Seney is inadequate because his case was dismissed in 2009 and therefore he
“has no ‘live’ action of any kind that can be considered for class certification or any other
purpose.” [Obj. Pls.’ Opp. at 14, 16; see also Prelim. Hr’g Tr. Day 1 (Quackenbos) 19:6-20:10.]
The settling parties contend that Seney “rejoined the litigation in the second amended complaint”
and therefore “has a live complaint” and is “adequate to represent the interests of the subscriber
class” as “[h]e was a subscriber. . . [and] [h]e’s complaining about under reimbursement [ ] using
Ingenix database.” [Prelim. Hr’g Tr. Day 1 (Cecchi) 16:16-17:5; see also D.E. 848 (“Settling
Pls.’ Reply to Obj. Pls.”) at 3.] In response, the objecting plaintiffs maintain that Seney’s
“attempted rejoining . . . by inserting his name in the second amended class action complaint . . .
did not effectively join him” as “[t]he only way [he] could have come back to life was had he
served and filed a new summons and complaint” and “[h]e did not do so.” [Prelim. Hr’g Tr. Day
1 (Quackenbos) 19:10-18; D.E. 896 (“Quackenbos PowerPoint”) at 4; Obj. Pls.’ Opp. at 5-6.]
Consequently, the objecting plaintiffs assert that this Court does not have jurisdiction over
Seney. [Obj. Pls.’ Opp. at 13.]
The Court is not persuaded by the objecting plaintiffs’ attempt to characterize Seney as
an inadequate representative based on the hyper-technical argument that the Court voluntarily

15

dismissed his claims without prejudice, when Seney’s identical claim was repled in the amended
complaint filed after these multi-district actions were consolidated.11 See Semtek Int’l Inc. v.
Lockheed Martin Corp., 531 U.S. 497, 505 (2001) (“The primary meaning of ‘dismissal without
prejudice,’ we think, is dismissal without barring the plaintiff from returning later, to the same
court, with the same underlying claim.”). As with the other members of the subscriber class,
Seney alleges that he was under-reimbursed for out-of-network services because of Aetna’s use
of Ingenix and other challenged reimbursement practices. [See Second Am. Compl. at ¶¶ 353358; Moving Br. at 11-12; Prelim. Hr’g Tr. Day 1 (Cecchi) 17:3-5.] Because there is no conflict
between Seney’s claims and those asserted on behalf of the class, and because the objecting
plaintiffs have failed to provide evidence suggesting Seney is unable or unwilling to represent
the claims of the class, the Court remains satisfied that he is an adequate representative for the
subscriber class. [See Larson, 687 F.3d at 132; Prelim. Approval Order at ¶ 8(c)(1).]
The objecting plaintiffs argue that Seney is also an inadequate representative of the
absent class members because he did not exhaust his administrative remedies. [Obj. Pls.’ Opp. at
7, n.4.] During the preliminary hearing, the settling plaintiffs stated that “the fact [Seney has]
not exhausted makes him the best [representative] [b]ecause most of the classes are not
exhausted and indeed we argued throughout the litigation that exhaustion was not a requirement
in this settlement context.” [Prelim. Hr’g Tr. Day 1 (Cecchi) 16:20-25.] In its reply submission,
Aetna properly points out that the crux of a settlement agreement is that parties will forgo claims
and defenses in order to avoid further litigation. To that end, Aetna stated that it has “agreed, for
settlement purposes, to settle with and provide compensation to subscribers in this case

11

The Court notes that, in their capacity as “members” of the Executive Committee, counsel for
the objecting plaintiffs were signatories to the second amended consolidated complaint that
explicitly included Seney’s allegations. [Second Am. Compl. at p. 201.]
16

regardless of whether they exhausted administrative remedies,” and has “also agreed to forego
other defenses under its settlement with respect to numerous other subscribers, including many
defenses that would apply to the non-settling subscriber plaintiffs who refer to themselves
throughout their brief as the ‘adequate subscriber plaintiffs.’” [Aetna Reply Br. at 2; see id. at 11
(not only are these challenges an “about-face from the positions [the objectors took] when
litigating their own claims, but [they] also miss the fundamental point: Aetna has many defenses
to liability with respect to all of the named plaintiffs, and settlement class members, but has
entered into the settlement in order to avoid a protracted and costly litigation of all of those
unique issues.”) (quoting In re Prudential, 148 F.3d at 318 (“avoidance of a ‘long, arduous’ trial
on the merits weighs in favor of approving settlement”)).]
The Court is persuaded that Seney’s lack of exhaustion is of no moment here, where a
majority of the absent class members have likely not sought the appropriate administrative
remedies and because Aetna has waived certain defenses, including exhaustion, in the spirit of
settlement.
ii.

Jeffrey Weintraub

As a student at New York University, Weintraub was insured under Aetna’s student
health plan, which was processed by an affiliate formerly known as Chickering (now known as
Aetna Student Health). [Settling Pls.’ Reply to Obj. Pls. at 10; Second Am. Compl. at ¶ 359.] In
2007, he received a covered service from an out-of-network provider and filed suit against
defendants alleging that he was under-reimbursed by Aetna for those services. [Id.; Second. Am.
Compl. at ¶ 361; see also, supra, at p. 2 (explaining that on April 8, 2009, Weintraub v. Ingenix,
Inc., No. 09-2027 – originally filed in the District of Connecticut, was consolidated with Cooper
v. Aetna Health Inc. under MDL No. 2020).]

17

The objecting plaintiffs contend that Weintraub is not an adequate subscriber
representative because he did not bring ERISA claims against defendants, as his student health
plan was a non-ERISA plan. [Obj. Pls.’ Opp. at 10, 12; see also Quackenbos PowerPoint at 4.]
The settling plaintiffs respond that “[t]his fact, while true, does not limit Weintraub’s ability to
release all claims provided they arise out of the same factual predicate as settled class claims.”
[Settling Pls.’ Reply to Obj. Pls. at 12; Prelim. Hr’g Tr. Day 1 (Cecchi) 27:10-14.] In light of
Weintraub’s allegations, the Court remains satisfied that he falls squarely within the subscriber
class, which includes persons who, at any time from March 1, 2001 through the preliminary
approval date, were plan members, received a covered service from an out-of-network provider,
and whose resulting claim was only partially allowed. [Settlement Agreement at § 1.50; Prelim.
Hr’g Tr. Day 1 (Cecchi) 17:19-23.]
The objecting plaintiffs also allege that Weintraub’s only claim arose out of Aetna’s use
of outdated Ingenix data and not the use of the Ingenix database itself. [Obj. Pls.’ Opp. at 1112.] Settling plaintiffs correctly point out that Weintraub also alleges that he was “misled as to
the actual reasonable and customary amount that should be reimbursed for out-of-network
services, and he suffered damages because of Aetna’s ongoing conspiracy with Ingenix, United
and other health insurers to perpetuate this misconception.” [Settling Pls.’ Reply to Obj. Pls. at
11-12; see also Prelim. Hr’g Tr. Day 1 (Cecchi) 27:3-9 (“Indeed, he did complain about outdated
data. But he also complained about the mere fact that Ingenix database with the underlying data
used to adjudicate his claim was inappropriate.”).]12

12

The objecting plaintiffs also indicate that Weintraub got $6.89 through a settlement between
Aetna and the New York Attorney General as a result of Aetna’s use of outdated data. [Obj.
Pls.’ Opp. at 11; Prelim. Hr’g Tr. Day 1 (Quackenbos) 22:17-19.] In response, the settling
plaintiffs point out that the six dollars represented the difference between the use of outdated
data and whatever data “would have been used at the time the services were rendered” – not for
18

Because the objecting plaintiffs have failed to show how Weintraub’s interests conflict
with those of absent class members or that he in unable or unwilling to represent the class 
vigorously, the Court remains satisfied that he is an adequate representative for the subscriber
class. [Prelim. Approval Order at §§ 8(c)-(d).]
iii.

Alan John Silver & Mary Ellen Silver

In January, 2010, the Silvers, who are husband and wife, filed a complaint in the
Northern District of California against Aetna, United, and Ingenix on behalf of a class of Aetna
subscribers injured by a secret and illegal agreement among defendants to manipulate and use
flawed data to set artificially low reimbursement rates for out-of-network services. Their action
was transferred to this district under MDL 2020. See Silver et al. v. Aetna Health Inc., et al.,
N.D. Cal. No. 10-cv-143; D.N.J. No. 10-cv-721 [D.E. 1]. The plan at issue was initially obtained
through Alan John Silver’s employer, New York Life Insurance Company, which is administered
by Aetna. [Id. at ¶ 153.] The complaint alleges that Aetna systemically under-reimbursed the
Silvers for their son’s out-of-network medical treatments in 2008 and 2009. [Id. at ¶¶ 156-158.]
The Silvers formally complained to Aetna regarding its under-reimbursement and appealed its
denial of benefits in 2009. [Id. at ¶¶ 158-160.]
The objecting plaintiffs allege that Alan John Silver is inadequate because he is a
Medicare beneficiary who does not have an ERISA claim. [Obj. Pls.’ Opp. at 9.] As with
Weintraub, Alan John Silver’s lack of an ERISA claim does not limit his ability to release all
claims since his allegations fall squarely within the subscriber class definition. [Settlement
Agreement at § 1.50.] To be sure, the Silvers’ claim -- that they were injured by Aetna’s

Aetna’s use of the Ingenix database itself. [Settling Pls.’ Reply to Obj. Pls. at 11 (emphasis in
original); see id. (“Aetna has never attempted to reimburse Mr. Weintraub for the difference
between the appropriately dated [ ] data and the actual usual and customary rate or billed
charge.”).] 
19

systemic under-reimbursement for out-of-network services resulting from its use of Ingenix -- is
typical of the class they seek to represent. [Prelim. Approval. Order at §§ 8(c)-(d).]
The objecting plaintiffs also argue that Mary Ellen Silver is inadequate because she is a
“tag-along plaintiff” added in as a subscriber representative “at the last minute on reply.” [Obj.
Pls.’ Opp. at 8-10; Quackenbos PowerPoint at 4; Prelim. Hr’g Tr. Day 1 (Quackenbos) 20:2023.] The Court agrees with the settling plaintiffs’ observation that because a majority of MDLs
resolve by way of settlement in the transferee district, it would defeat the underlying purpose of
MDL to foreclose “tag-along” plaintiffs such as the Silvers from being parties to the settlement
agreement. [See Prelim. Hr’g Tr. Day 1 (Cecchi) 25:5-21.]
Finally, relying on a previous representation from Aetna, the objecting plaintiffs contend
that the Silvers “have not participated meaningfully in this litigation, and would therefore not be
adequate class representatives.” [Obj. Pls.’ Opp. at 9-10, 17, 20-22, 46 (citing D.E. 673 at pp.
71-72, n. 46); Obj. Pls.’ Omnibus Br. at 7; Prelim. Hr’g Tr. Day 1 (Quackenbos) 21:20-22:7.]
As with its waiver of the exhaustion requirement Aetna states that the objecting plaintiffs “miss
the fundamental point” when they cherry-pick sound bites from its earlier opposition to class
certification. Aetna “has many defenses to liability with respect to all of the named plaintiffs,
and settlement class members, but has entered into the settlement in order to avoid a protracted
and costly litigation of all of those unique issues.” [Aetna Reply Br. at 11; Prelim. Hr’g Tr. Day
2 (Doren) 77:13-17.] Also in response, the settling plaintiffs state that any suggestion that the
Silvers were not actively involved in this action is incorrect; “[t]he Silvers complied with all
discovery requests served on them, producing document and written discovery responses five
months before plaintiffs’ motion for class certification was filed,” and “prepared for deposition”

20

despite the fact that “Aetna chose not to notice one.” [Settling Pls.’ Reply to Obj. Pls. at 9; see
also Prelim. Hr’g Tr. Day 1 (Cecchi) 17:14-16; Prelim. Hr’g Tr. Day 2 (Doren) 81:20-22.]13
3. Conclusion
The Court is not persuaded by these challenges to the adequacy and typicality of the
representative subscriber plaintiffs. The objecting plaintiffs have failed to show that the proposed
representatives do not have the ability and the incentive to represent the class vigorously and/or
that their interests are in conflict with the absent class members. See Larson, 687 F.3d at 132.
C. ERISA Plaintiffs’ Objection to the Adequacy of the Proposed Settlement
As noted above, once the court determines that the proposed settlement classes meet the
standard requirements under Rule 23(a) and (b), it must then determine whether the proposed
settlement is “fair, reasonable, and adequate” under subsection (e). Rodriguez, -- F.3d --, 2013
WL 4046385, at *4 (citing Sullivan, 667 F.3d at 296).
The same ERISA plaintiffs who object to the subscriber representatives also oppose
approval of the proposed settlement because they allege that the terms of the settlement are
onerous and unconscionable. [Obj. Pls.’ Opp. at 23-44.] Their primary argument is that the
settlement does not afford sufficient monetary relief to subscriber class members, either because
the total funds are not large enough or because the documentation requirements to participate in
the prove-up funds are unreasonable. [Id ]

13

In response to the argument that the Silvers’ counsel was similarly inactive, Obj. Pls.’ Opp. at
10, n.7, the settling plaintiffs state that while counsel for the Silvers did not attend mediation
sessions because they were not appointed to the Executive Committee, they “stayed up to date on
the status of the negotiations, worked on the discovery related to the Silvers’ claims, coordinated
that discovery with the Plaintiffs’ Executive Committee, and did all the work they were asked to
do in this litigation,” Settling Pls.’ Reply. to Obj. Pls. at 9.
21

1. Rule 23(e) Standard for Adequacy of Proposed Settlement
“Review of a proposed class action settlement is a two-step process: preliminary approval
and a subsequent fairness hearing.” Jones v. Commerce Bancorp, Inc., No. 05-5600, 2007 WL
2085357, at *2 (D.N.J. 2007) (Kugler, J.) (citation omitted). “Preliminary approval is not
binding, and it is granted unless a proposed settlement is obviously deficient.” Id. Indeed,
“[p]reliminary approval is appropriate where the proposed settlement is the result of the parties’
good faith negotiations, there are not obvious deficiencies and the settlement falls within the
range of reason.” Zimmerman v. Zwicker & Assoc., P.C., No. 09-3095, 2011 WL 65912, at *2
(D.N.J. Jan. 10, 2011) (Schneider, J.)14 (citing Jones, 2007 WL 2085357, at *2); see also In re
Nasdaq, 176 F.R.D. at 102 (“Where the proposed settlement appears to be the product of serious,
informed, non-collusive negotiations, has no obvious deficiencies, does not improperly grant
preferential treatment to class representatives or segments of the class and falls within the range
of possible approval, preliminary approval is granted.”) (citing Manual for Complex Litigation,
Third at § 30.41 (West 1995)).
2. Discussion & Analysis
Challenging preliminary approval of the proposed agreement, the objecting plaintiffs,
who are now represented by the firm of Epstein & Quackenbos, P.C., allege that the settlement
was not the result of good faith negotiations because it was reached “without the benefit of any
mediator, after the exclusion of the adequate plaintiffs and their counsel,” in violation of CMO

14

As the settling plaintiffs point out, the objectors’ reliance on Zimmerman to support their
substantive argument that the relief here is mythical is misplaced. In Zimmerman, plaintiff’s
attorney attempted to settle all claims on behalf of 800,000 consumers in return for a cy pres
payment of $32,000 to United Way rather than seeking class-wide relief of any kind.
22

No. 2. [Obj. Pls.’ Opp. at 2; Obj. Pls.’ Omnibus Br. at 5-6.]15 These attorneys (hereafter
“counsel for the objectors”) allege that at the last mediation session, Aetna’s final offer “was
unanimously rejected by plaintiffs’ counsel, including both counsel for providers and counsel for
subscribers.” [Obj. Pls.’ Omnibus Br. at 2-3; see also Prelim. Hr’g Tr. Day 2 (Quackenbos)
11:10-16.] The gravamen of their objection is that the settling parties cut them out and secretly
negotiated, in violation of CMO No. 2. In response, the court-appointed settlement liaison points
out that at the last in-person mediation, counsel for the objectors called Judge Chesler to make an
oral motion to stay the mediation, which was denied. [Settling Pls.’ Reply to Obj. Pls. at 14-15
(citing Cecchi Cert. ¶¶ 13, 15).]

Moreover, after Judge Chesler ordered the mediation to

proceed, according to the settlement liaison Judge Politan relayed Aetna’s final offer and
“[e]very member of Plaintiffs’ Executive Committee” agreed to it, with the exception of counsel
for the objectors. [Id. at 15 (citing Cecchi Cert ¶ 17).] At oral argument, counsel for the
objectors stated that after the final mediation session they did not learn of a possible settlement
with Aetna until November 10, 2012 at which time they were told the settlement “was going
ahead with or without” them. [Prelim. Hr’g Tr. Day 2 (Quackenbos) 11:17-24; 12:8-17.] The
exclusion of counsel for the objectors resulted, they allege, in settlement funds that are arbitrary,
unjustified, and unconscionable in that they can revert back to Aetna. [Obj. Pls.’ Opp. at 26-33.]

15

At the preliminary hearing, Barry Epstein and Barbara Quackenbos indicated that they had
recently left the Wilentz firm and opened up their own office. After the hearing, Epstein and
Quackenbos filed consent orders granting substitution of counsel for the six objecting plaintiffs.
[D.E. 894-895.] During the second day of the preliminary hearing, Epstein moved to replace the
Wilentz firm on the Aetna Plaintiffs’ Executive Committee. [Prelim. Hr’g Day 2 (Epstein) 7:712.] In response, Kevin Roddy, on behalf of the Wilentz firm, pointed out that in CMO No. 2
Judge Hochberg ordered that the Wilentz firm serve on the Executive Committee as an entity rather than appointing Epstein and Quackenbos personally. [Id. (Roddy) 86:2-11.] Roddy also
stated that the Wilentz firm “wholeheartedly supports the settlement” and argued that any
modifications to CMO No. 2 would not be appropriate for disposition on an oral motion. [Id.
86:12-20; see also D.E. 892.] The Court agrees.
23

Internecine warfare among counsel augurs a fight over legal fees, but first the Court must
apply the legal precepts governing adequacy under Rule 23(e)(2). In that respect, the Court is
satisfied that the extensive proceedings, including substantial fact and expert discovery
coincident with 13 negotiation sessions with a respected and experienced mediator, gave counsel
on both sides ample opportunity to adequately assess the strengths of their respective positions
and facilitated serious and informed negotiations. See In re Ins. Brokerage Antitrust Litig., MDL
1663, 2007 WL 2589950, at *2-3 (D.N.J. Sept. 4, 2007) (Brown, C.J.), aff’d 579 F.3d 241 (3d
Cir. 2009) (quoting preliminary approval order at 7-8) (granting preliminary approval to a class
action settlement after finding that: “(a) the settlement agreement resulted from extensive arm’slength negotiations and was concluded only after class counsel had conducted broad discovery
and the settling parties had consulted independent experts about the issues raised by the
complaints, and (b) the settlement agreement is sufficiently fair, reasonable and adequate to
warrant sending notice of the action and settlement agreement to settlement class members and
holding a full hearing on the settlement.”).
In addition to challenging the negotiations between the settling parties, the objecting
plaintiffs complain that the recovery available to the claimants -- $120 million -- does not
adequately capture Aetna’s potential exposure. [Prelim. Hr’g Tr. Day 2 (Quackenbos) 15:416:2; 16:16-17; Obj. Pls.’ Opp. at 28-30.]
On that point, the Court notes that the invalidity of the Ingenix database as well as the
amount of damages resulting from using it are heavily contested issues. By the end of the
discovery period, both parties had collected calculations and opinions from various experts. On
one hand, the objectors indicate that one of their experts, Dr. Foreman, calculated Aetna’s
potential exposure to be between 2 and 3.1 billion dollars. [Prelim. Hr’g Tr. Day 2 (Quackenbos)

24

15:5-8.]

On the other hand, Aetna contends that making modifications to Dr. Foreman’s

calculation to address critiques presented by defense experts would reduce the damages
calculation to $52 million. [Aetna Reply. Br. 5-6; see also Prelim. Hr’g Tr. Day 2 (Doren) 75:1277:10.] Acknowledging this range of calculations, the settling parties point out that to fully
assess the adequacy of the settlement fund, the Court must also consider the risks plaintiffs’ face
if they proceed with litigation. Among those risks are the effect of Judge Chesler’s recent denial
of a materially identical motion for class certification on a litigation class in Franco v. Cigna,
289 F.R.D. 121 (D.N.J. 2013) and the fact that the injunctive relief here was Aetna’s agreement
with the New York Attorney General to stop using the Ingenix database. [Prelim. Hr’g Tr. Day 2
(Doren) 72:4-19; 82:22-83:2.]16
Without doubt, both sides face challenges if they continue to litigate. The Court is
satisfied that the funds available to claimants under the proposed settlement agreement fall
within the range of reason. [See Prelim. Approval Order at ¶¶ 4-5.]
The objecting plaintiffs’ final argument regarding the adequacy of the proposed
settlement is that the prove-up funds documentation requirements and the existence of the
reversionary provision make it problematical that the claimants will ever obtain the funds
allocated. [Obj. Pls.’ Opp. at 29.] In this regard, the objectors argue that because the class
period goes back 11 years claimants will have “great or more likely insurmountable difficulty”

16

  See also Press Release, Attorney General Cuomo Announces Expansion of Historic Health
Insurance Reform: Aetna Will End Relationship With Company That Manipulated Rates To
Overcharge Patients By Hundreds of Millions of Dollars (Jan. 15, 2009), available at
http://www.ag.ny.gov/press-release/attorney-general-cuomo-announces-expansion-historichealth-insurance-reform-aetna-will. (last visited Aug. 30, 2013).  

25

producing the information required - “virtually guarant[ing] the substantial ‘reversion’ of funds.”
[Id. at 36-37, n.13, 39.]17
During the preliminary fairness hearing, counsel for the objecting plaintiffs used
hypotheticals to illuminate the difficulty claimants may have obtaining relief from one of the
prove-up funds. [Prelim. Hr’g Tr. Day 2 (Quackenbos) 18:3-24:5; Quackenbos PowerPoint at
14-20.] The Court asked counsel for the settling plaintiffs to elaborate on what, if any, appeals
process would be available for claimants denied recovery under one of the prove-up funds as a
result of lack of or insufficient documentation. [Prelim. Hr’g Tr. Day 2 (Court) 24:6-9.] Counsel
explained that in the event that the settlement administrator denies a claim, he or she would send
a deficiency letter “specifying exactly what the deficiency is and what needs to be done in order
to cure the deficiency.” [Id. (Axelrod) 24:13-19.] Upon receipt of these deficiency letters,
claimants have a certain amount of time to cure the deficiency before the final adjudication is
made. [Id. 24:19-23.] The notice provision also indicates that claimants unable to locate the
requisite documentation can query Aetna’s database, which contains relevant claim information
from the class periods. [Id. (Cecchi) 28:6-12; see also Class Notice at Section VI.] Finally, if a
claimant is unable or unwilling to submit the documentation required under one of the prove-up
funds, they have the option of seeking relief under the general settlement fund.18 [Id. (Cecchi)

17

 Objecting plaintiffs also make a cursory attack on the notice provision as it relates to claimants

ability to recover under this settlement: “part of what propels people to come forward is a readily
understandable notice and a clear sense of what they are likely to get out of the settlement, and
we believe that the settlement is deficient on those grounds.” [Prelim. Hr’g Tr. Day 2
(Quackenbos) 17:8-11.] After reviewing the proposed class notice documents, the Court is
persuaded that the content of the notices is sufficient to “apprise [the] interested parties of the
pendency of the action and afford them an opportunity to present their objections.” In re Cendant
Corp. Sec. Litig., 109 F. Supp. 2d 235, 254 (D.N.J. 2000); see also Moving Br. at 18-19. 
18
The objecting plaintiffs argue that the ability to recover from the general fund is inadequate
because after attorneys’ fees and costs, the general fund will be depleted to approximately $15
million. [Prelim. Hr’g Tr. Day 2 (Quackenbos) 15:21-16:2.] The settling plaintiffs object to this
26

45:1-2; see also Settlement Agreement at §§ 10.1(d), 10.2(d); see also “NOTE” in Section B of
the Subscriber and Provider Claim Forms; Class Notice at Section VI (same).] The Court also
inquired about the discretion given to the settlement administrator in charge of adjudicating the
claims submitted. Counsel represented that the settlement administrator is appointed with the
goal of paying valid claims and is very sensitive to individual circumstances rather than simply
“making sure that the T’s or I’s are crossed and dotted.” [Prelim. Hr’g Tr. Day 2 (Axelrod)
30:21-31:16.]19 In this regard, the settling parties point out that this is one, among other, features
of this settlement that distinguish it from that reached in McCoy v. Healthnet, No. 03-1801 –
where the insurer is the claims administrator. [Id. (Cecchi) 45:15-18 (“the idea from this
settlement’s perspective is not to deny valid claims, it’s to pay valid claims. Again, I can’t
comment about HealthNet, but here the claims administrator will administer not Aetna.”).]
In light of counsel’s representations, the Court is satisfied that the requirements for
seeking reimbursement under the terms of the settlement are not so onerous as to violate due
process or render recovery a myth. [Prelim. Hr’g Tr. Day 2 (Court) 39:15-17; 77:21-78:1.]
3. Conclusion
Based on the foregoing, the Court is satisfied that the proposed settlement warrants
preliminary approval as it falls within the range of reason and is the result of serious, informed
negotiations.
Date: August 30, 2013

/s/ Katharine S. Hayden
Katharine S. Hayden, U.S.D.J.

calculation and point out that the settlement and notice provisions limit attorneys’ fees to 33% of
the settlement. [Id. (Cecchi) 48:3-4.] But the ultimate fee determination is left to the Court’s
discretion.
19
An additional safeguard is a provision in the settlement agreement that stipulates that the
parties must “submit a joint report to the Court on the status of the claims received and
determinations by the Settlement Administrator as to the completeness and validity of the claims,
as well as the amounts to be paid.” Settlement Agreement at § 12.5(d).
27