Lawyers are trying to organize a securities class-action suit against a large managed care company.
Lawyers at Coughlin Stoia Geller Rudman & Robbins L.L.P., San Diego, have filed a complaint against Aetna Inc., Hartford, and some Aetna officers and directors on behalf of an institutional investor in the U.S. District Court in Philadelphia.
The institutional investors are seeking court permission to represent a class of plaintiffs that would include investors who bought Aetna stock between July 28, 2005, and July 27, 2006, according to lawyers at Coughlin Stoia.
Investors in that class who would like to serve as the lead plaintiff can apply to the court to serve lead plaintiff, the lawyers say.
The initial plaintiff alleges in the complaint that, during the class period, Aetna and its officers "made false and misleading statements regarding the company's business and prospects," according to lawyers at Coughlin Stoia.
During the class period, Aetna concealed from the investing public the fact that the company "was losing small group policies, which had historically had favorable medical cost ratios … and was moving to higher cost ratios with new members, which would cause increased MCRs in future quarters," the plaintiff alleges in the complaint.
The plaintiff also alleges that much of Aetna's earning gains in 2005 and in early 2006 were due to understated reporting of "incurred but not reported" accruals, and that Aetna's MCR was misleading because the company "had priced new policies so low that the MCR was certain to be much higher in future quarters."
Aetna has issued a brief statement contesting the allegations.
"We intend to defend this case very vigorously, but, beyond that, we don't comment on litigation," Aetna spokesman Fred Laberge says in the statement.
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