Louisiana Judge Lifts Hold Sought By Aetna On Medicaid Contracts

A state court judge in Louisiana dissolved on Wednesday a temporary restraining order that had stopped health officials there from awarding Medicaid contracts while insurer Aetna Inc. (AET) sorted out its appeal plans.

Aetna has protested the state's decision to award what could add up to about $2 billion in annual revenue to five other firms that will coordinate service for nearly 900,000 Medicaid recipients. The company felt the process was flawed and lacked transparency.

"We are disappointed in today's decision and continue to have concerns with the manner in which the Medicaid contracts were awarded," Aetna said in a statement late Wednesday. "We believe that there were errors in the procurement process and in the scoring of the awards. We are evaluating all of our options and will make a decision shortly on how to proceed."

A 19th Judicial District Court official and a spokeswoman for the Louisiana Department of Health and Hospitals, the agency that picked companies to manage the government health plan for the poor, also confirmed Wednesday's ruling by Judge William A. Morvant.

The Health and Hospitals department already denied an Aetna appeal, as did the state's commissioner of administration. Last week, a different judge temporarily handling the case signed an order setting the temporary restraining order while giving Aetna 14 days to determine whether it intended to file a petition.

In the same court on Tuesday, Judge Todd Hernandez ruled against an effort by the three publicly traded Medicaid winners in Louisiana--Amerigroup Corp. (AGP), Centene Corp. (CNC), and UnitedHealth Group Inc. (UNH)-- to keep their information private and out of Aetna's hands.

Tyler Mason, a spokesman for UnitedHealth Group, said in an email that the insurer was evaluating the court decision and considering all available legal options, including the possibility of an appeal. A Centene spokesperson could not be reached for comment Wednesday, and an Amerigroup spokesman declined comment.

The state health agency in July recommended Medicaid contracts for those insurers plus two private firms. "We are moving forward with the contracts and readiness reviews," agency spokeswoman Lisa Faust said following Wednesday's ruling.

Aetna closed down 6.7% at $40.26 Wednesday, and was up 1.4% after hours.

-By Jon Kamp, Dow Jones Newswires; 617-654-6728; [e-mail]