Court records allege Cigna uses four distinct schemes to embezzle and convert funds by defrauding patients, healthcare providers, and their own Self-Insured Health Plan clients …………………
Cigna Sued for RICO Violations, “Brazen Embezzlement and Conversion Scheme” -Health Plan Litigati
Published on August 6, 2020
Vice President and Co-Founder at AVYM Corporation
Cigna Does Not Follow The Law, Providers Tell Federal Court
Medical Providers Fire Back At Cigna’s Motion, Telling The Judge That “Cigna Does Not Follow The Law, And It Misrepresents How It Actually Administers The Plans.”
In the Reply Brief of Plaintiffs Advanced Gynecology and Laparoscopy of North Jersey, et al v. Cigna Health and Life Insurance, Medical Providers allege that Cigna appears to not only ignore Plan and legal requirements of the Self-Insured Health Plans which it administers but also employs multiple schemes to pay substantially less for covered charges already acknowledged as accepted and processed under the Plan terms, ultimately improperly shifting the financial burden to the patients. According to court records:
“Cigna shifts financial responsibility for covered expenses onto the backs of patients, their employers, and Plaintiffs, while Cigna’s profits grow.”
In this case, which we have written about before, a group of out-of-network Medical Providers sued Cigna for RICO and ERISA violations, alleging CIGNA accepts the out-of-network provider claims at the full billed charges and requests the same amount from the corresponding Self-Insured Health Plans. However, instead of paying the Provider or member, CIGNA hires a Repricing Company to try and negotiate a reduction.
The Providers additionally allege that if they refuse to negotiate, CIGNA pays the claim at an exorbitantly low level but appears to keep the difference between what was removed from the Self-Insured Health Plan and what was paid to the Providers. In an attempt to conceal this from both patients and Self-Insured Health Plans, CIGNA issues Electronic Remittance Advice (ERA) or paper Explanation of Benefits forms (EOB) misrepresenting the claim balance, or the difference between what was removed from the Plan and paid to the Providers, as a “Discount” to the members.
The Subscriber EOBs certify the member is not responsible for the claim balance, simultaneously; the Provider ERAs represent the claim balance to the Providers, as a member liability or “Amount Not Covered”.
The suit also alleges that CIGNA’s claims process for out-of-network claims, including the Cigna Claims, violates the “HIPAA standard transaction rules under 45 C.F.R. § 164”, by using incorrect “45” coding combinations”.
Case info: Advanced Gynecology and Laparoscopy of North Jersey.et. al. v. Cigna Health and Life Insurance; Case Number: 2:19-cv-22234 in the United States District Court for the District of New Jersey, Filed December 31, 2019.
Cigna filed a Motion to Dismiss on May 06, 2020. The Medical Providers filed this reply to Cigna’s motion on July 24, 2020: Reply brief of Plaintiffs Advanced Gynecology and Laparoscopy of North Jersey, et al v. Cigna Health and Life Insurance; 2:19-cv-22234; Doc 54, filed 7/24/2020.
According to the Providers, Cigna’s main argument is that the Health Plans do not entitle claims reimbursement of “100% of billed charges”. Indeed, that argument consumes much of Cigna’s 45-page motion, where “Cigna repeats this assertion forty times in its forty-five page brief.”
In rebuffing the argument, Providers tell the court Cigna mischaracterizes the Amended Complaint, explaining, “The Amended Complaint states clearly that Plaintiffs are entitled to reimbursement of “up to” 100% of the fees incurred by their Subscriber patients. “Up to” 100% plainly means Plaintiffs may be entitled to 100% reimbursement for some patients and some procedures, but may be entitled to less than 100% reimbursement for some patients and some procedures.”
The Providers further argue that Cigna misstates some claims and completely ignores others and has not actually responded to the detailed descriptions and numerous exhibits in the Amended Complaint that purport to show how Cigna fraudulently administers the Health Plan terms. Instead, Providers argue Cigna does not attack the Provider’s claims as pled because Cigna “lacks ammunition for that fight”; and Cigna’s own motion raises “factual disputes that can only be resolved after full discovery” and does not provide a basis to dismiss claims before such time.
According to court records, Cigna receives claims for reimbursement from out-of-network Providers and proceeds to draw down the full amount (Billed Charges) of the Provider’s claims from the trust funds of Cigna Administered Plans. However, instead of remitting the entirety of the funds to the Providers, Cigna remits only a fraction to the Providers and retains the rest for “impermissible purposes”, in violation of the terms of the various Health Plans and applicable costsharing mandates under state and federal law.
Court records allege Cigna uses four distinct schemes to embezzle and convert funds by defrauding patients, healthcare providers, and their own Self-Insured Health Plan clients by using direct quotes from Health Plans and Cigna’s own written communications: the “Fictitious Contracting Scheme”, a “Repricing Reduction Scheme”, the “Contradictory EOB Scheme” and the “Forced Negotiations Scheme”.
The “Fictitious Contracting Scheme”: According to the Providers, Cigna Administered Health Plans and Subscribers are misled into believing that Cigna’s underpayments of out-of-network claims are legitimate because of an in-network contract or negotiated agreement with a third-party “Repricing Company”. The Providers allege Cigna falsely represents to patients that Cigna negotiated “discounts” with the out-of-network Medical Providers and that “Cigna negotiates discounts with health care professionals and facilities to help you save money.” Moreover, on the Provider ERA forms for the same transactions, Cigna uses the so-called “CO-45” code combination, with “CO” signifying “Contractual Obligation” and “-45” signifying “Charge exceeds fee schedule/maximum allowable or contracted legislated fee arrangement.” Cigna argues that this code combination is properly used when the medical provider’s “charge exceeds either the contracted in-network rate or the out-of-network maximum allowable rate like the MRC or R&C.”
“But when Cigna applies the “CO-45” coding combinations to amounts described as “discounts” on the patient EOBs, Cigna is falsely representing that Cigna “contracted” for the reduction.”
The “Repricing Reduction Scheme”: The Providers also allege that Cigna misleads its own clients (Cigna Administered Self-Insured Health Plans) into paying “cost-containment” fees to Cigna and Repricing Companies calculated as a percentage of the underpayment in relation to the value of the Providers’ claims. Yet, while Cigna represents that “applying these discounts avoids balance billing and substantially reduces the patient’s out-of-pocket cost,” Cigna pays itself and the Repricing Companies cost-containment fees whether or not the cost-containment process saves the Self-Insured Health Plan money. Ironically, Cigna has been at the forefront of initiating litigation against out-of-network providers for not collecting patient liabilities in full. Interestingly, this case alleges that Cigna misrepresents the balance of unpaid claims as “Discounts” to its members.
The “Contradictory EOB Scheme”: Here the Providers allege that Cigna has tried to confuse and mislead them as well as patients, through false and inconsistent statements on Cigna-issued EOB forms issued to patients and ERA forms issued to the Providers. Cigna tells the Providers on the ERA forms that the amounts Cigna has held back are “not covered” by the Plans or are subject to “adjustments,” and the patient owes the balance. However, Cigna’s EOB forms issued to the patients for the same claim, report that Providers agreed to a “discount” and the patient has “saved” the rest.
According to court records, “it is impossible to reconcile Cigna’s statements on the patient EOBs—that a “discount” was applied to their claim and the patient “saved” the amount of the discount—with Cigna’s statements on the provider ERAs for the same claims, that make clear that the patient has not “saved” anything because they show that the patient owes a huge balance bill.”
The “Forced Negotiations Scheme”: The fourth Scheme alleges that Cigna forces out-of-network Medical Providers to enter into negotiations for payment of valid claims, with the goal of either coercing or wearing down the Providers to accept drastic underpayments. Allegedly, Cigna conspires with repricing companies to misrepresent deep discounts, saying in some instances that the services are not covered. According to the Providers, Cigna’s processing system is set up to automatically send all out-of-network claims to the Repricing Companies. The repricing companies, in turn, send the Providers letters threatening that the services will not be covered at all, or that the Providers will be reimbursed at a percentage of the Medicare rate. Even worse, if the settlement offers are rejected, Cigna falsely declares large portions of the claim “not covered.”
All ERISA health plans, medical providers and patients must educate themselves in order to understand the facts of these cases.
For years large insurers’ controversial processes have been an issue for out-of-network providers across the nation. Now, self-insured plans are starting to feel the pain of these same, potentially illegal, practices.
Health plans must be proactive by validating that plan assets are used to pay for their member’s medical expenses or otherwise get returned to their plan.
