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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND SOUTHERN DIVISION

LORETTA BOYD et al., Plaintiffs, v. COVENTRY HEALTH CARE INC. et al., Defendants. Civil Action No. 8:09-cv-02661-AW Related Actions: 09-2850-AW 09-3063-AW 09-3074-AW 10-0462-AW

MEMORANDUM OPINION Pending before the Court is Defendants' Motion for Reconsideration of the Court's March 31, 2011 Opinion and Order ("Motion for Reconsideration"). The parties have fully briefed the issues and the Court deems no hearing necessary. For the reasons stated herein, the Court GRANTS IN PART and DENIES IN PART Defendants' Motion for Reconsideration. I. FACTUAL AND PROCEDURAL BACKGROUND Except where otherwise indicated, the Court takes the following facts from Plaintiffs' Amended Complaint and construes them favorably to Plaintiffs. Defendant Coventry Health Care Inc. ("Coventry") is a national managed health care company based in Bethesda, Maryland. Coventry operates health plans, insurance companies, network rental/managed care services companies, and workers' compensation services companies. In addition to Coventry, Plaintiffs

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name several Coventry employees as Defendants. Plaintiffs categorize these Defendants as "Director Defendants," "Officer Defendants," and "Committee Defendants."1 Plaintiffs participated in an ERISA defined contribution plan ("the Plan") that Coventry sponsored. The Plan is a voluntary contribution plan whereby participants make contributions to the Plan and direct the Plan to purchase investments with those contributions from investment options that participants pre-select. From February 9, 2007 through October 22, 2008 (the "Class Period"), the Plan acquired and held shares of Coventry common stock. Coventry common stock was offered as one of the retirement saving options in the participant-contribution component of the Plan. In other words, Plan participants could direct their accounts to be invested in Coventry Stock and twenty-three mutual funds that the Plan offered as investment options. The Plan authorizes Coventry to make employer matching contributions up to a certain level based on a participant's contributions and compensation. Plaintiffs assert that Coventry made all of its matching contributions in Coventry common stock. Plaintiffs also state that the Plan documents did not obligate Coventry to invest solely in Coventry stock. Plaintiffs' allegations revolve around Coventry's Medicare Advantage Private Fee for Service product ("PFFS"). PFFS is a type of Medicare plan that private companies offer that allows members to choose their own healthcare provider. Coventry launched PFFS in forty-three states on January 1, 2007. Plaintiffs maintain that, at the start of the Class Period, Coventry's future growth prospects depended highly on PFFS. Nevertheless, Plaintiffs contend that Coventry launched PFFS without establishing a control system by which it could monitor, process, account for, and pay claims emanating from insureds' visits to non-network service providers. According to Plaintiffs, this omission caused a claims-processing lag that adversely affected Coventry's profitability. Nonetheless, in Plaintiffs' estimation, Coventry employed
                                                            
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Plaintiffs also name the "401(k) Plan Investment Committee" as a Defendant.

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underpricing strategies to create a false appearance that PFFS was as profitable as Coventry touted it to be. Additionally, Plaintiffs allege that Defendants and other Coventry insiders sold hundreds of thousands of shares of personally held Coventry stock for gross proceeds in excess of $14 million even as certain Defendants issued misleading statements about Coventry's financial health. Plaintiffs further allege that Defendants issued these inaccurate statements through a variety of outlets, including a SEC filing and a press release. Based on these and other allegations, Plaintiffs filed a class-action complaint against Defendants on October 13, 2009. Doc. 1. In their Amended Complaint, filed on June 28, 2010, Plaintiffs assert four claims. Doc. 17. Count I asserts a claim for failing to prudently and loyally manage the Plan and assets of the Plan. In Count II, Plaintiffs assert a claim for failing to monitor fiduciaries. For its part, Count III asserts a claim for failing to avoid conflicts of interest. Finally, Count IV asserts a claim for co-fiduciary liability. On August 12, 2010, Defendants filed a Motion to Dismiss Plaintiffs' Amended Complaint ("Motion to Dismiss"). Doc. 20. The Court ruled on Defendants' Motion to Dismiss on March 31, 2011 ("March 31 Opinion"). Doc. 29. In the March 31 Opinion, the Court granted in part and denied in part Defendants' Motion to Dismiss. Whereas the Court denied the Motion to Dismiss as to Counts I, III, and IV of the Amended Complaint, the Court granted it as to Count II. On April 14, 2011, Defendants filed the instant Motion for Reconsideration. Doc. 33. Defendants use their Motion for Reconsideration largely to rehash arguments that the Court rejected in its March 31 Opinion. II. STANDARD OF REVIEW In pertinent part, Rule 54(b) provides that Courts may revise interlocutory orders "at any time before the entry of a judgment." Fed. R. Civ. P. 54(b); see also Moses H. Cone Mem. Hosp. v. Mercury Const. Corp., 460 U.S. 1, 12 (1983) (footnote omitted) (noting that "every order short

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of a final decree is subject to reopening at the discretion of the district judge"). In view of this discretion, "[m]otions for reconsideration of interlocutory orders are not subject to the strict standards applicable to motions for reconsideration of a final judgment." Am. Canoe Ass'n v. Murphy Farms, Inc., 326 F.3d 505, 514

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