Three Charlottesville residents are again pressing their claim that Sentara Health gouged local consumers with preposterous premiums, this time with a heavyweight legal team.
The new complaint, filed Sept. 23 in federal court, brings in Rick Mountcastle, the former prosecutor who successfully fought Purdue Pharma over OxyContin, the addictive painkiller blamed for decimating low-income communities across America, particularly in the rural South. Mountcastle joins forces with two firms that recently won a $1.6 billion verdict against a Johnson & Johnson subsidiary.
”A mere glance at their track record tells you these firms take on successful cases against powerful corporations,” said plaintiff Sara Stovall.
The first legal name on the new complaint, filed in the Western District of Virginia, is that of Mountcastle. Now in private practice, he is the former assistant U.S. attorney in this same district who showed how Purdue pushed OxyContin. He was portrayed by actor Peter Sarsgaard in the acclaimed Hulu miniseries “Dopesick.”
The two other firms signing on to the Charlottesville suit are Berger Montague and Reese Marketos. Both were involved in winning a civil jury verdict that led to this year’s $1.6 billion judgment against a Johnson & Johnson subsidiary. The company, Janssen Products, was found to have wrongly promoted for unapproved uses a pair of AIDS and HIV drugs with potentially serious side effects. Janssen is currently appealing that award in the United States Court of Appeals 3rd Circuit.
The Charlottesville case stems from 2017, when residents trying to buy insurance for the following year under the Affordable Care Act, often called Obamacare, suddenly found themselves seeing the highest insurance rates in the nation.
Two competing companies, Aetna and Anthem, had dropped out to leave the sole local provider as Optima, a wholly owned subsidiary of Norfolk-based Sentara Health. The whistleblowers claim that Optima used its monopoly position to illegally extract ridiculous rates.
“In Charlottesville, rates nearly tripled and were by far the highest in the nation,” according to the new complaint. “This was the largest rate increase in the history of the ACA.”
By contrast, Sentara, claims that Anthem’s exodus, announced in August of 2017, left Optima just 26 days to revise its rates.
“At a time when Virginians were at risk of losing access to ACA coverage, Sentara worked with government leaders to meet the needs of Virginians — quickly expanding coverage and supporting the health of our communities,” Sentara spokesman Dale Gauding told The Daily Progress in a prepared statement.
Gauding noted that the Virginia Bureau of Insurance investigated the rates in 2018 and found them “actuarily reasonable.” Sentara also points to the June decision by the U.S. Department of Justice, which announced it was taking the lead on the case late last year, to cease assisting the whistleblowers’ claims.
“The DOJ thoroughly reviewed the case and ultimately declined to intervene, reaffirming what we’ve said from the beginning: the facts and the evidence are on our side,” Gauding continued.
The suit, however, gives an example of the impacts of Anthem’s exit and Optima’s ensuing price hike:
“For example, whereas a family of four in Charlottesville could have purchased Anthem’s cheapest health plan in 2017 for $940 per month, that same family would have to pay $2,920 to Optima every month in 2018 (and a family deductible of $14,400) for the least expensive plan — an increase of over 200%.”
Like the Janssen case with its $1.6 billion verdict, the Charlottesville case was filed under a federal law called the False Claims Act. Enacted during the Civil War to prevent price-gouging by government contractors, it provides for trebled damages: i.e., three times the amount of the alleged fraud, plus penalties.
“We are absolutely thrilled that our False Claims Act case is in the expert hands of the most successful, reputable law firms in the country,” Stovall told The Daily Progress. “We are as confident as ever that the facts are on our side, that what we allege is true and that Sentara owes a large amount of money back to the taxpayers.”
Sentara, however, points to a provision of the False Claims Act as giving the three plaintiffs — Stovall along with fellow Charlottesville residents Ian Dixon and Karl Quist — a reason to sue other than altruism. The law, in its current form, lets whistleblowers, termed “relators” in government parlance, share in the proceeds, up to 30%.
“It’s unfortunate that the relators in this case have misconstrued the facts in an effort to win financial gains,” said Gauding.
Alerted to an allegation that that she’s twisted the record for money, Stovall bristled but decided against directly responding.
“We are as confident as ever that the facts are on our side, that what we allege is true and that Sentara owes a large amount of money back to the taxpayers,” Stovall said.
The trio of relators contends that evidence came the following year when total claims fell short of projections by about 49% and profits soared by 146%. They point to the medical loss ratio, the MLR, the percentage in premiums an insurer pays out for the actual provision of health care for policyholders. In 2018, the national average was 78%, but in Charlottesville it was just 35%.
“In fact, Optima generated 13% of the total MLR shortfall nationwide among all insurers, even though it insured only about 0.6% of the national market,” according to their suit.
Unlike the first civil action, which was focused on Sentara and its top executives, the new lawsuit also targets the company that compiled the underlying risk data, a Seattle-based actuarial firm called Milliman Inc.
The whistleblowers contend that Milliman worked “hand in glove” with Sentara and that Milliman certified Sentara’s numbers using not actuarial data but Sentara’s business needs. Milliman scoffs.
“Milliman categorically denies these accusations,” company spokesman Jeremy Engdahl-Johnson told The Daily Progress. “Milliman advised Sentara at a time of great uncertainty, using the best available information and in accordance with actuarial standards of practice.”
Did the about-face by the Justice Department on supporting the suit have anything to do with the change in presidential administrations? Stovall’s team won’t say what they think. What they do say in the complaint is that they seek a jury trial to press their claims of bad faith assumptions, material omissions and false and misleading certifications.
Optima has rebranded as Sentara Health Plans, but it’s always been owned by Sentara. For Sentara, whose Charlottesville hospital was once Martha Jefferson Hospital, the company is still a nonprofit entity and one that appears eager to fight for its reputation.
“We will continue to vigorously defend against these meritless allegations,” said Gauding, “while remaining fully focused on our not-for-profit mission: improving health and access to care across the Commonwealth.”
Hawes Spencer (434) 960-9343
hspencer@dailyprogress.com
@HawesSpencer on X
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