A scheme to withhold, embezzle, and convert ERISA plan assets through a pattern of fraudulent benefits transactions and prohibited self-dealing……..Practices that may be endemic to the industry as a whole?
SOURCE: Jeff Bernhard, President Continental Benefits
CIGNA Administered Health Plan, DHL Express, Sued for Embezzlement Scheme
- Published on July 8, 20160
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Vice President and Co-Founder at AVYM Corporation
CIGNA administered client, DHL Express, and its plan administrator, Robert Whitaker have been sued in federal court in Houston, alleging that the giant delivery company teamed up with its insurance company and brazenly engaged in a “scheme to withhold, embezzle, and convert ERISA plan assets through a pattern of fraudulent benefits transactions and prohibited self-dealing misconduct. Under this backdrop, together Defendants and Cigna concocted an intricate scheme to transfer and embezzle plan funds.”
According to the complaint, DHL and their parent company, colluded with CIGNA: “in spite of the glaring conflict of interest and inherent breach of fiduciary duties, Defendants agreed to an unlawful compensation structure that financially rewards Cigna for wrongfully denying and underpaying benefits claims. Under this backdrop, together Defendants and Cigna concocted an intricate scheme to transfer and embezzle plan funds.”
Additionally, the alleged scheme by DHL and Cigna left patients responsible for more than their designated share of the cost under the terms of the health care plan, “ resulting in an arrangement where Cigna, a co-fiduciary, [reprehensibly] competes with the Plan’s own beneficiaries for entitlement to plan funds.”, according to the lawsuit.
Click Here for Case info: Center for Advanced Surgical Treatment v. DHL Express and Robert Whitaker in the United States District Court for the Southern District of Texas, Houston Division, Case Number: 4:16 cv01919; Filed June 30, 2016.
This latest case seems to be another brick in the wall of ongoing cases, alleging similar violations, against CIGNA administered health plans across multiple sectors of the economy. Among top companies ensnared in litigation by CIGNA’s practices include household names such as Macys, JP Morgan Chase and Chevron. These practices may be endemic to the industry as a whole as evidenced by other large UnitedHealth administered health plans, such as GAP and AT&T that have also faced lawsuits alleging similar violations.
The complaint further alleges that DHL had complete and full knowledge of the possible scheme but not only refused to conduct an investigation, consistent with its fiduciary duty, but actually delegated the investigation to the fiduciary CIGNA, the alleged perpetrator of the embezzlement!
According to court documents:“ Despite actual knowledge of Cigna’s self-dealing misconduct stemming from repeated alerts and warnings from Plaintiff’s official ERISA Appeals, Defendants systematically refused to take corrective action, and instead, DELEGATED INVESTIGATION OF THE SUSPECTED WRONGDOING TO CIGNA [emphasis added]”- the identified perpetrator of the misconduct.”
And, in a particularly reprehensible move, the complaint further alleges that the plans and their co-fiduciary Cigna may have intentionally misrepresented to the patients, through the EOB’s, the actual amount that was covered and paid on the claims.
The complaint alleges: “ According to the explanation of benefits that was sent to the Patient, it appeared that all of the charges were denied in error and the total amount of the charges covered was $200,355.00. However, this amount was never paid to Plaintiff, but was kept by Cigna”.
The latest DHL lawsuit, which was filed on June 30, 2016, comes on the heels other recent lawsuits involving Cigna and Cigna Administered ERISA health plans:
- an unprecedented $13.7M ruling against CIGNA, filed on June 1, 2016, with $11.4M for underpaid claims and an additional $2.3M in statutory penalties. In that case, CIGNA’s fee forgiving protocol and claim for reimbursement of “overpayments” came under fire by the courts, ultimately ruling that CIGNA’s interpretation of plan’s “exclusionary language” provision as the basis for it’s fee forgiving protocol, was “flawed” and “legally incorrect“. The court also ruled that CIGNA’s claim for reimbursement of overpayments “fail as a matter of law” reasoning no lien or constructive trust was created and tracing requirements were not met.
- eight days later, on June 9, 2016 over 100 of CIGNA’s self-insured clients, along with their Plan Administrators were named as defendants in a massive fraud lawsuit, alleging the plans “participated in a conspiracy and pattern of unlawful, reckless, and deceptive conduct to conceal an embezzlement and/or skimming scheme”
- and just twelve days after 100 Cigna client were sued, on June 21, 2016, Macys, another Cigna Administered ERISA Health Plan, was sued for embezzlement, alleging “Cigna issued a payment check to Plaintiff to satisfy a claim filed by Plaintiff for services performed on a patient, who is a Plan Beneficiary of Defendants; however, in addition to issuing a check to Plaintiff, Cigna issued a secret check to itself for the same amount. Cigna then cashed the secret check it issued to itself, and then placed a stop on the check issued to Plaintiff before Plaintiff could receive and cash the check to reimburse itself for services performed on Defendants’ Plan Beneficiary“
As we have mentioned many times before, all ERISA health plans, medical providers and patients must educate themselves in order to understand the facts of these cases. Health plans must be proactive in ensuring benefits are adjudicated and ultimately paid solely based on the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses. Medical providers must be also proactive and adopt compliant practices and policies. Patients must understand their benefits plans and their rights as allowed under ERISA.
To read the full article and learn more about these cases click HERE.