Aetna U.S. Healthcare and Hospitals Squabble Over Contract

Aetna U.S. Healthcare has filed a lawsuit against the owner of two network hospitals in an attempt to block those hospitals from prematurely terminating contracts with the managed care giant.

Blue Bell, Pa.-based Aetna U.S. Healthcare said it took the action to "protect the continuity of care" for members who currently use the two hospitals: Morristown Memorial Hospital in Morristown, NJ, and Mountainside Hospital in Montclair, NJ.

The lawsuit was filed against Atlantic Health System, Inc. in the Superior Court of New Jersey, Chancery Division, Bergen County. Aetna U.S. Healthcare and the hospital system remain locked in a rate negotiation dispute. The managed care company is asking the judge to prohibit the hospitals from terminating their existing contract, which expires May 31, 2001, on the basis of the rate dispute.

"We hope that we can come to an amicable agreement with Atlantic Health System so that they remain in our hospital network," said Andrew Schuyler, M.D., senior network medical director, Northern New Jersey, Aetna U.S.

Healthcare. "We have attempted to negotiate a renewal with Atlantic Health System in good faith, and we are troubled that they have walked away from the negotiations having presented a 40-percent `take it or leave it, non-negotiable' offer."

Superior Court Judge Marguerite T. Simon has entered an Order to Show Cause, directing Atlantic Health System to demonstrate why the court should not issue an injunction preventing Atlantic Health System from terminating its Morristown Memorial Hospital and Mountainside Hospital contracts with Aetna U.S. Healthcare. The matter has been set for a hearing on February 10, 2000.

Two other hospitals in Atlantic Health's system -- Overlook Hospital in Summit, NJ, and General Hospital Center at Passaic in Passaic, NJ, -- are not subject to the litigation.