The lawsuit Aetna brought against a law firm and a pro-consumer interest group over a privacy gaffe that resulted in a $17 million payout by the insurance giant has been transferred from Philadelphia to Los Angeles federal court.
Last year Aetna sued plaintiffs firm Whatley Kallas and the nonprofit Consumer Watchdog in the U.S. District Court for the Eastern District of Pennsylvania over their alleged role in a blunder that resulted in thousands of HIV patients having their names and conditions visible through clear windows in envelopes that had been sent through the mail.
However, on March 29, U.S. District Judge Juan Sanchez determined that the Eastern District of Pennsylvania did not have jurisdiction over the claims, and ordered that the case, Aetna v. Whatley Kallas, be transferred to the U.S. District Court for the Central District Of California.
As part of its effort to establish specific jurisdiction in the Keystone State, the insurance giant had noted that the defendants previously filed a nationwide class action suit and sought the participation of Pennsylvania citizens in that action. But Sanchez said adopting that argument would go against the due process clause.
“Aetna’s theory of jurisdiction would effectively establish per se specific jurisdiction over putative class counsel in all 50 states once a putative class action is filed,” Sanchez said in the 16-page ruling. “Such a holding runs contrary to the notion of personal jurisdiction as a limit pursuant to the due process clause, and would wholly subvert the purposeful availment prong of the specific jurisdiction analysis.”
Moving the federal litigation to Los Angeles now brings the case geographically closer to similar claims that Aetna brought in California state court last year. That litigation is currently pending in the California Court of Appeal after it was dismissed in August.
The federal dispute stems from an underlying lawsuit in which the insurance giant was sued in federal court in Philadelphia after it mailed notifications to patients about how to fill their HIV drug prescriptions. The notifications, however, clearly identified the HIV patients in the envelope windows. After that matter settled, Aetna was hit with another suit for exposing patients’ confidential information a second time when settlement notifications were again sent out to potential class members in envelopes with transparent windows.
After Aetna agreed in January 2018 to settle those claims for more than $17 million, the carrier sued Whatley Kallas and Consumer Watchdog, which had represented the class members, alleging they were responsible for sending out the mailings that led to the second breach.
Aetna’s complaint consists of four counts: implied indemnity, equitable indemnity/comparative negligence, the right of contribution, and declaratory relief.
The parties conceded that Pennsylvania did not have general jurisdiction, since Aetna is based in Connecticut, Whatley Kallas is based in Colorado and Consumer Watchdog is based in California, so Sanchez looked to the conduct that led to Aetna’s current lawsuit to determine whether specific jurisdiction applied. According to Sanchez, all of those activities, including reviewing, revising and discussing the notices, all occurred in California.
“None of these activities brought Whatley or Watchdog into direct, purposeful contact with Pennsylvania,” Sanchez said. “On the contrary, Whatley and Watchdog’s conduct was directed towards overseeing the settlement administration process occurring in California.”
Margolis Edelstein attorney James Kahn, who is representing Watchdog, said the organization was pleased with the ruling.
“[We] believe it was the correct one,” he said. “California is where these events occurred, as Judge Sanchez recognized.”
Neither Thompson Coburn attorney David Duffy, who represented Whatley, nor Manatt, Phelps & Phillips attorney Brandon Reilly, who represented Aetna, returned a call for comment Monday afternoon.