Aetna sues NYC and rival insurers over loss of $34 billion Medicare contract

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Aetna is suing New York City and a rival health insurers group over a $34 billion Medicare contract it says was awarded to unqualified bidders.

The Hartford health insurer filed a lawsuit in New York Supreme Court earlier this month accusing the city’s Office of Labor Relations of selecting an “inexperienced and unqualified bidder,” violating New York procurement law, lacking transparency and breaching “principles of public trust and fairness for a procurement that could last up to a minimum of five or as many as 11 years and generate $34 billion in claims revenue.”

Aetna, a subsidiary of CVS Health Corp., asked the court to void the health insurance agreement between the city and the Alliance, a consortium of health insurers that includes Emblem Health and Anthem/Blue Cross and Blue Shield.

The office of Commissioner Renee Campion at the Office of Labor Relations did not immediately respond to an email seeking a response to the lawsuit. A spokeswoman for the Alliance said the insurers will not comment on pending litigation.

The city selected the Alliance to operate the Medicare Advantage Plus program that administers health benefits to 250,000 retired city workers.

Aetna said the Alliance misrepresented to the city that it met the minimum requirement for Medicare Advantage members and supplied inaccurate enrolled member counts.

Aetna said it’s the largest provider of group Medicare Advantage plans in New York.

It also said confidentiality was breached by a member of the bid evaluation committee when she remarked that Aetna would not charge a premium and by the Office of Labor Relations when it requested a best and final offer by referencing that Aetna had supplied pricing beyond the requested time period.

In an emailed statement, Aetna said the bid solicitation required bidders to have 50,000 Medicare Advantage members.

“We recognize why this requirement is important, as the experience of serving large Medicare Advantage customers can significantly impact the health and well-being of retirees at a time when they need care the most,” Aetna said. “One of our primary concerns is that this decision leaves retirees with a much lower quality plan at a much higher cost at a time when they can least afford it.”

Stephen Singer can be reached at