When Dummy Codes Cost Real Money: Lessons from the Peters v. Aetna Settlement
In September 2025, the long-running ERISA class action Sandra Peters et al. v. Aetna and Optum reached a settlement, which was approved for over $8 million, closing a case that began in 2015. The lawsuit, which we wrote about before, revealed how fee-shifting and opaque subcontractor arrangements can quietly erode fiduciary trust. For employer plan sponsors, the case is more than a headline, it’s a blueprint for strengthening oversight and restoring confidence.
⚖️ The Allegations
Aetna allegedly disguised administrative fees as medical expenses, misrepresenting costs on member Explanation of Benefits (EOBs) and inflating member cost-sharing. Optum, (a subsidiary of UnitedHealth Group) acting as Aetna’s subcontractor, facilitated the practice. The result? Systemic overcharges and fiduciary breaches.
Mislabeling Fees: Aetna allegedly disguised administrative charges as medical expenses on member EOBs. Optum (a UnitedHealth subsidiary) facilitated the practice. Ultimately, Members faced inflated cost-sharing, and fiduciary duties were compromised.
According to court records, after treating a patient, the health care provider submitted its claim to Optum for the services rendered. Optum then added a “dummy” CPT code to the claim to reflect a bundled rate fee, consisting of Optum’s administrative fee and the cost of the health care provider’s services. Optum would then forward the bundled rate fee claim to Aetna for its approval. In turn, this bundled rate fee would be paid based on the Plan’s responsibility framework.
In other words, Aetna and Optum allegedly colluded to hide administrative fees by disguising them as Medical Services fees
The Peters v. Aetna case delivered a sharp reminder that fiduciary accountability doesn’t hinge on contractual language, it hinges on control, conduct, and candor. Below are key takeaways from the court’s findings and the broader implications for executives overseeing health plan operations:
- Functional Fiduciary Status – Aetna was held to ERISA fiduciary standards based on its control over claims and appeals, even without explicit contractual language;
- Fee Shifting and Misrepresentation – Labeling administrative fees as clinical costs violated duties of loyalty and transparency;
- Equitable Remedies Apply – The court affirmed that surcharge and disgorgement are valid remedies, even without individualized proof of financial harm.
🚨 Fiduciary Risks for Executives
Even well-intentioned executives can face fiduciary exposure when oversight mechanisms lag behind operational complexity. As recent cases have shown, relying solely on contractual language or vendor assurances isn’t enough.
- Hidden Fee Structures – Subcontractor charges disguised as clinical costs can inflate member liability.
- Passive Oversight Exposure – Sponsors who rely on contracts alone face reputational, financial, and legal risk.
- Documentation Gaps – Weak delegation protocols and oversight records undermine fiduciary defenses.
📊 Strategic Takeaways for Plan Sponsors
Fiduciary risk isn’t just about what’s written in the contract, it’s about what sponsors can prove they actively oversaw. As recent litigation has shown, passive reliance and thin documentation can leave even well-structured plans exposed.
- Audit Subcontractor Relationships – Confirm fees aren’t disguised as clinical claims charges.
- Scrutinize EOB Language – Misleading formats can trigger fiduciary liability.
- Clarify Delegation Boundaries – Contracts must reflect actual decision-making authority.
- Document Oversight Protocols – Courts expect proof of active monitoring.
💼 Why It Matters
This case reaffirms that fiduciary duty isn’t just a legal checkbox, it’s about leadership. Executives who act decisively can: Prevent litigation and regulatory scrutiny; Reinforce member and stakeholder trust; Position their organization as a fiduciary standard-bearer
💡 Lead with Fiduciary Clarity
Your health plan deserves more than compliance, it deserves confidence. In the wake of Peters v. Aetna, fiduciary oversight isn’t optional. It’s strategic. Our team partners with executive leadership to transform risk into resilience and ambiguity into alignment.
Here’s how we help sponsors lead from the front:
- Validate Claims & Find Hidden Fee Flows – Trace every dollar to ensure accuracy and defensibility
- Review Delegation Protocols – Align contracts and operations with fiduciary accountability
- Reinforce Governance Frameworks – Build systems that document oversight, escalation, and board visibility
💼 Let’s Make Fiduciary Leadership Your Competitive Advantage
Whether you’re preparing for regulatory review, onboarding vendors, or rebuilding stakeholder trust, we’re ready to help you lead with precision, transparency, and strategic control.
Let’s talk. Your next move sets the standard.