(By Balachander) Aetna Inc. (NYSE: AET) has agreed to pay up to $120 million to settle litigation related to the payment of claims for services by out-of-network providers.
Under the terms of the settlement agreement, Aetna will pay $60 million and pay up to an additional $60 million at the end of a claim submission and validation period that commences upon final court approval of the settlement.
The health insurer expects to record an after-tax charge to net income of roughly $78 million in the fourth quarter of this year related to the proposed settlement.
Aetna will be released from claims relating to its out-of-network reimbursement practices from the beginning of the applicable settlement class period through the date the New Jersey Federal Court preliminarily approves the settlement.
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The first class action case was commenced on July 30, 2007, and the litigation is pending in the United States District Court for the District of New Jersey.
Aetna expects final court approval of the settlement in mid-2013.
On Friday, shares gained 2.21 percent to trade at $44.39. Over the past year, the stock has been trading between $34.58 and $51.14.