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On the heels of the U.S. Supreme Court’s recent decision that protected HMOs from being sued under ERISA, the 3rd U.S. Circuit Court of Appeals will hear argument today in the first of a wave of cases that make the same accusations but use a different, and more powerful, law — civil RICO. The case is sure to be closely watched because similar suits are still pending in five different courts. Squaring off today before a three-judge panel in Maio v. Aetna Inc. are attorneys Alan J. Davis of Ballard Spahr Andrews & Ingersoll in Philadelphia for Aetna and Edith M. Kallas of Milberg Weiss Bershad Hynes & Lerach in New York for the plaintiffs. The case was dismissed last year when Senior U.S. District Judge John P. Fullam ruled that the plaintiffs lacked standing since their injury was purely hypothetical. The proposed class action suit was brought by a group of consumers who say Aetna lured them in with false promises of high-quality care while secretly pressuring doctors to cut costs and provide only minimum care. But Fullam ruled that “a vague allegation that `quality of care’ may suffer in the future is too hypothetical an injury to confer standing.” To establish standing in federal court, Fullam said, a plaintiff must show an “injury in fact” that is “concrete and particularized” as well as “actual or imminent” as opposed to “conjectural or hypothetical.” The Maio plaintiffs failed that test, Fullam said, because granting them standing “would require this court to assume that in every case, individual physicians and IPAs [independent physician associations] will be moved to put their own economic interests ahead of their patients’ welfare.” Even if that assumption were correct, Fullam said, Aetna “would not be the proximate cause of the providers’ ethical lapses.” On appeal, the plaintiffs’ lawyers argue that Fullam missed the point since the injury the plaintiffs suffered occurred as soon as they were induced to pay for a policy with false promises. “In essence, plaintiffs allege that, as a result of defendants’ undisclosed policies and practices, membership in the HMO is worth less than that charged by Aetna, causing plaintiffs to suffer a RICO injury,” Kallas wrote. Joining Kallas on the brief were Milberg Weiss attorneys David J. Bershad, Patricia M. Hynes and Charles S. Hellman, as well as Eugene A. Spector, Jeffrey L. Kodroff and Andrew Abramowitz of Spector & Roseman in Philadelphia; Harvey Rosenfeld of the Foundation for Taxpayer and Consumer Rights in Santa Monica; and Philadelphia sole practitioner James J. Binns. Kallas argues that Aetna and its related companies “represented that they offer a premium HMO which provides higher quality care than that which is available from competing companies, and provide network physicians who are given the independence to make decisions solely on the basis of medical need and who are compensated under a system that provides them with incentives to increase the quality of care.” But the plaintiffs, she wrote, “received an inferior product.” Fullam’s ruling — that the plaintiffs lacked standing because their injury was hypothetical — was “fundamentally flawed,” Kallas argues, because “RICO injury is properly pled by alleging conduct constituting fraud, not breach of contract or conduct resulting in personal injury.” HMO members don’t have to wait for their benefits to be denied or for a personal injury to occur, she argues, because in a fraud suit the fraud itself is the proximate cause of their injuries. “As a result of defendants’ misrepresentations and omissions at the time of purchase, plaintiffs paid too much for the product,” she wrote. DEFENSE BRIEF Aetna’s lawyers insist that Fullam got it right and that the plaintiffs’ theory that they paid too much is based on pure speculation. Attorney Alan Davis, who was joined on the brief by Ballard Spahr attorney Burt M. Rublin, argues that the plaintiffs “made a tactical decision to expressly disclaim any present injury due to the denial of benefits, reduction of benefits, inferior care, malpractice, negligence or breach of contract.” Instead, Davis argues, the plaintiffs claim that Aetna’s policies cause their HMO memberships to be “worth less” than what their employers paid for them. That theory, Davis argues, “rests entirely on rank speculation concerning potential future injury.” Davis says Fullam “was not required simply to accept at face value plaintiffs’ conjectural allegations of a diminution in product value under these circumstances.” The federal appellate courts, he argues, “have consistently affirmed the dismissal of complaints premised on similarly speculative theories of injury.” The second reason why the plaintiffs lack standing, Davis argues, is that any causal connection between Aetna’s alleged actions and their alleged injuries “is impermissibly remote.” The HMO coverage at issue, he notes, was purchased not by the plaintiffs themselves but, rather, by their employers. As a result, Davis argues, the employers “would thus be the primary — if not the only — injured party even under plaintiffs’ own theory of their case.” Stretching the theory even further, Davis says, is the fact that the quality of the health care provided to plaintiffs is dependent not on Aetna’s policies and practices but on the actions of the various physicians who treat them. Davis argues that there is no direct relationship between Aetna’s alleged actions and the plaintiffs’ alleged injuries. Fullam was also correct, Davis argues, in holding that Aetna’s advertised commitment to “quality of care” was “nothing more than puffery.” Such a generalized statement, he argues, “would not be interpreted by any reasonable consumer as a factual claim on which the consumer would rely.” The ruling in Maio will directly affect two cases currently pending in the trial courts of the 3rd Circuit — Amorosi v. Aetna Inc. in the District of New Jersey and Conte v. Aetna US Healthcare Inc. in the Eastern District of Pennsylvania. Indirectly, the 3rd Circuit’s decision could influence the outcome of three more federal cases — O’Neill v. Aetna in the Southern District of Mississippi; Ross v. Aetna Inc. in the Southern District of California; and Curtwright v. Aetna Inc. in the Northern District of California. The case is scheduled as the fourth case to be argued today before a panel consisting of U.S. Circuit Judge Morton I. Greenberg, Senior U.S. Circuit Judge Joseph F. Weis Jr. and Senior U.S. District Judge Murray Schwartz of the District of Delaware who is sitting on the court of appeals by invitation.

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