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CIGNA DOES NOT FOLLOW THE LAW, MEDICAL 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 further 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 in validating that plan assets are used to pay for their member’s medical expenses or otherwise get returned to their plan.

Avym has helped Self-Insured Health Plans recover millions from TPAs that engage in questionable practices. Avym advocates for ERISA plan assets audit and embezzlement recovery education and consulting. With new Supreme Court guidance on ERISA anti-fraud protection, we are ready to assist all self-insured plans recover billions of dollars of self-insured plan assets on behalf of hard-working Americans. To find out more about Avym’s Fiduciary Overpayment Recovery Specialist (FOR) and Fiduciary Overpayment Recovery Contractor (FORC) programs contact us.

Cigna Sued for RICO Violations, “Brazen Embezzlement and Conversion Scheme” -Health Plan Litigation Tsunami: Part 2

CIGNA is accused of violating the Racketeer Influenced and Corrupt Organizations Act, through a “brazen embezzlement and conversion scheme” allegedly defrauding patients, healthcare providers and self-insured health plans. According to court documents Cigna “allegedly engaged in a pattern of racketeering activity that includes embezzlement and conversion of funds, repeatedly and continuously using the mails and wires in furtherance of multiple schemes to defraud.

This extraordinary lawsuit comes on the heels of a massive settlement, where CIGNA and American Specialty Health agreed to pay $20M after they were accused of misrepresenting medical expenses by concealing material information.

CIGNA Health and Life Insurance Company is one of the “big five” which represents the five largest health insurers in the United States. Prior to acquiring Express Scripts in 2018, Cigna relied heavily on its Third Party Administrator platform, providing services to health plans of all sizes for private commercial health plans as well as state and local government plans.

Among CIGNA’s customers are many large, well known, national companies that reach across different sectors of the economy, from banking to manufacturing to retailers.

According to the 150 page complaint: “Plaintiffs bring this lawsuit to expose Cigna’s brazen embezzlement and conversion schemes, through which it maximizes profits by defrauding patients, healthcare providers, and health plans of insurance out of tens of millions of dollars every year… The result is that Cigna succeeds in shifting financial responsibility for covered expenses onto the backs of patients, their employers, and Plaintiffs, while Cigna gets rich.”

This latest case seems to be the culmination of a spate of recent cases alleging similar violations. This troubling pattern may be an indication that no employer sector is immune to possibly fraudulent claims processing practices. All of this seems to provide more evidence of increased scrutiny for self-insured health benefits that has long been commonplace for retirement benefits.

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.

In summary, the lawsuit alleges that CIGNA accepts the out-of-network provider’s claims at the full billed charges and requests the same amount from the self-insured health plan. However, instead of paying the medical provider or member, CIGNA hires a Repricing Company to try and negotiate a reduction. If the provider refuses 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 medical providers. In an attempt to conceal this from the patient and self-insured health plan, CIGNA issued Electronic Remittance Advice or paper Explanation of Benefits forms (collectively, the “EOB”) misrepresent the balance as “Discount” to the members, certifying the member is not responsible for the balance, while simultaneously representing the balance to the Plaintiffs as member liability or “Amount Not Covered”.

Astonishingly, the complaint alleges that CIGNA, after being advised of these anomalies, not only refused to correct the issues but instructed the medical provider plaintiffs to sue to rectify the situation! According to the court documents:

“After numerous detailed communications with Cigna management in which Plaintiffs protested Cigna’s unlawful processes and procedures, Cigna informed Plaintiffs that it has no compliance department capable of addressing these issues, and encouraged Plaintiffs to initiate legal action in order to prompt Cigna to act. Plaintiffs have decided to follow Cigna’s suggestion.”

The complaint further alleges that CIGNA has violated the Racketeer Influenced and Corrupt Organizations Act, (RICO) through four distinct schemes:

  1. misrepresenting that a contract or agreement exists between the Plaintiffs and CIGNA or its vendor “Repricing Company”;
  2. conspiring with its vendor “Repricing Companies” to submit fraudulent “Savings Fees” to the self-insured health plan;
  3. attempting to conceal the scheme by altering the Explanation of Benefits (EOB), sent to the medical provider and to the patient for the same claims, where the patient’s EOB represents the outstanding balance as a negotiated “Discount”, however the medical provider’s EOB shows the outstanding balance as the “Amount Not Covered”;
  4. again conspiring with its vendor “Repricing Company” by coercing the Plaintiffs to accept exorbitantly low reimbursements;

Ironically, CIGNA has been at the forefront of initiating litigation against out-of-network providers for not collecting patient liabilities in full. Yet, this suit alleges CIGNA misrepresents the balance of unpaid claims as “Discounts” to its members.

This case 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”. The complaint also alleges CIGNA has violated the “uniform operating rules for the exchange of Automated Clearing House (“ACH”) electronic fund transfer payments among financial institutions that are used in accordance with Federal Reserve regulations and maintained by the Federal Reserve and the Electronic Payments Associations, known as the National Automated Clearing House Association or “NACHA.”

The first scheme allegedly involves CIGNA’s use of the “mails or wires to misrepresent to Plaintiffs, Cigna Subscribers, and the Cigna Plans, that Cigna underpaid Plaintiffs’ claims either because of a contract between an individual Plaintiff and Cigna as an in-network provider or with a third-party leasing contractor or negotiator couched as a repricing company (“Repricing Company”) to accept discounted rates (the “Fictitious Contracting Scheme”).”

The Plaintiffs allege they are not in-network nor have they agreed to any reductions with the “Repricing Company”. According to court records, “While repricing of in-network claims is permissible when there is an existing contract between a provider and Cigna, Plaintiffs are out-of-network providers who have not contracted with Cigna or any Repricing Company. Cigna profits from improperly withholding these payments from Plaintiffs by transferring ERISA Cigna Plan trust assets to a Cigna controlled bank account (which it otherwise is entitled to do under contracts between the ERISA Cigna Plans and Cigna) and earning interest off of funds that are rightfully Plaintiffs’ under the ERISA Cigna Plans. Cigna also embezzles or converts ERISA Cigna Plan trust assets by charging the ERISA Cigna Plans improper “cost-containment” fees.”

The complaint goes on to allege that CIGNA’s second scheme to defraud involves its conspiring with the Repricing Companies to “underpay Plaintiffs’ Cigna Claims via a euphemistically named “cost-containment process” that it misrepresents to the Cigna ERISA Plans as a cost-savings mechanism to save the Cigna ERISA Plans money on out-of-network claims administration (the “Repricing Reduction Scheme”).”

Plaintiffs allege that through this scheme, every out-of-network claim is sent through the wires to a Repricing Company where the Repricing Company recommends to CIGNA that CIGNA pay a deeply slashed reimbursement rate. CIGNA invariably adopts that recommendation and processes the claim for (under)payment. Additionally, the complaint alleges that “Cigna’s contracts with the Cigna ERISA Plans falsely state that this process is only applied to claims for which the Repricing Company has an existing contract with an out-of-network provider. Cigna uses these gross misrepresentations as cover for its embezzlement or conversion of ERISA Cigna Plan trust assets in the guise of cost-containment fees based on a percentage of the “savings.” Cigna then pays a commission to the Repricing Companies that is similarly based on a percentage of “savings.”

According to Plaintiff’s allegations, CIGNA’s third scheme to defraud involves its false and inconsistent statements on CIGNA-issued EOBs and is referred to as the “Contradictory EOB Scheme”. When processing a claim by an out-of-network provider, the suit alleges, “Cigna will state on an ERA or EOB issued to a healthcare provider (a “Provider EOB”) that the amounts wrongfully retained by Cigna are not covered under the terms of the pertinent Cigna ERISA Plan or are subject to certain “adjustments” that are inconsistent with the terms of the Cigna ERISA Plans. But on the EOBs issued to the Cigna Subscribers for the same claims (the “Patient EOB”), Cigna will report completely different information. Cigna may falsely state that Plaintiffs are either contracted with Cigna to accept certain rates, or have agreed with Cigna or a Repricing Company to accept a “discount;” both complete fabrications.”

By way of the example provided in the complaint, it appears CIGNA has told the provider:

“the unlucky Cigna Subscriber owes it $60,316.07 as the amount not covered under the Subscriber’s Plan, but has told the Subscriber that he/she owes the provider only $895.25 because Cigna negotiated a 98% discount with the provider. In doing this, Cigna misrepresents to Cigna Subscribers that the amounts improperly adjusted by Cigna are “discounts.” This misrepresentation appears on most Cigna Claim Patient EOBs.”

The suit alleges CIGNA’s fourth scheme to defraud involves its conspiracy with the Repricing Companies to force out-of-network providers like Plaintiffs to enter into negotiations for payment of valid claims, with the goal of either coercing or wearing down the providers so they accept drastic underpayments for the claims (the “Forced Negotiations Scheme”). In conspiracy with CIGNA, the Repricing Companies, such as Zelis or Medical Audit & Review Solutions (MARS), send offer letters through the mails designed to intimidate and coerce out-of-network providers such as Plaintiffs to accept the settlement offers. In some instances, the Repricing Companies will threaten that the services provided to the Cigna Subscriber will not be covered at all, or that they will be reimbursed at a percentage of the Medicare rate. And, as expected, the Pricing Companies will reimburse the providers even grossly insufficient amounts only if the provider waives all rights to additional payment.

According to the complaint, “the following is an example of Cigna’s Forced Negotiations Scheme, “whereby a provider Plaintiff rejected an offer of payment for $30,550 of total incurred charges of $41,680 from MARS, a Repricing Company contracted by Cigna. Once the provider refused the settlement offer, Cigna processed the claim, improperly misstated that the Cigna Plan covering the Cigna Subscriber only paid a percentage of Medicare, and reimbursed only $1,858.55, or 4.5% of the total incurred charges for the services rendered by the provider Plaintiff.”

“Through these four schemes, Cigna improperly deprives Plaintiffs and the Cigna ERISA Plans of funds and profits by engaging in any or all of the following conduct, among others: (1) embezzling and/or converting the amount characterized as a “discount” on the Patient EOB that is rightfully due and owing to the Plaintiffs under the terms of the Cigna ERISA Plans; (2) earning interest on these amounts, and (3) wrongfully profiting through embezzlement and/or conversion of ERISA Cigna Plan trust assets based on cost containment fees calculated as a percentage of the “discounted” amount.”

-According to court records

All ERISA health plans, medical providers and patients must educate themselves in order to understand the facts of these cases. For years, Cigna’s processes have been a thorny issue for out-of-network providers across the nation and now, self-insured plans are starting to feel the pain of these potentially illegal practices.

Medical providers must be proactive and adopt compliant practices and policies. Health plans must also be proactive in validating that plan assets are used to pay for their member’s medical expenses or otherwise get returned to their plan, and not applied to cover shortfalls in another plan.

Avym Corp. has advocated for ERISA plan assets audit and embezzlement recovery education and consulting. With new Supreme Court guidance on ERISA anti-fraud protection, we are ready to assist all self-insured plans recover billions of dollars of self-insured plan assets, on behalf of hard-working Americans. To find out more about Avym Corporation’s Fiduciary Overpayment Recovery Specialist (FOR) and Fiduciary Overpayment Recovery Contractor (FORC) programs contact us.

Boomerang Effect Part II-Federal Court “Bars” Cigna From Recouping Self-Insured Plan Assets

Boomerang comes back to hit Cigna

Another Federal Court Rules Against Cigna In Alleged Fee Forgiving/Overpayment Recoupment Dispute With Medical Provider- Court “Bars” Cigna From Relying On “Legally Incorrect” Interpretation of ERISA Plans

On March 10, 2017 in the US District Court of Connecticut, Judge Alfred V. Covello ruled in favor of surgical center defendants and against Cigna, barring Cigna from recouping self-insured plan assets based on alleged “overpayments” which were predicated on Cigna’s “legally incorrect” interpretation of ERISA plans “exclusionary language”.

This decision offers clear guidance on critical issues such as cross-plan offsetting, Cigna’s fee forgiveness protocol, SIU practices and ERISA disclosure requirements, confirming the profound shift in Out-of-Network benefits and claim processing for all health care providers and health plans in the nation.

The decision also further unwinds the payor initiated “out-of-network fraud” enigma as we have written about before, and is one of a series of critical court decisions which address the typical scenario for out-of-network providers: payors refusal to pay claims which leads to “catch-all” out-of-network lawsuits seeking total overpayment refunds of claims previously paid to providers, all based on broad and vague allegations of fraud.

The case revolves around Cigna’s fee forgiving protocol, whereby Cigna denies medical claims if its members don’t pay their entire out of pocket cost up front. Based on this premise, Cigna is also seeking recovery of approximately $17 million in alleged “overpayments” made to providers that did not collect the full patient out of pocket liability up front.

Court case info: Connecticut General Life Insurance Co. et al. v. True View Surgery Center One, LP et al. Case No.:3:14-cv-01859-AVC; US District Court Connecticut

In what may have been the impetus for a litigation tsunami, where over 100 Cigna administered health plans were sued for various ERISA violations including embezzlement, issuing “secret checks” and self-dealing, Cigna filed suit on 12/11/2014 against True View Surgery Center One and affiliated health care providers seeking declaratory and injunctive relief under ERISA and essentially asking the court to declare that “no coverage is due” where medical providers “do not enforce the plans’ cost-share requirements”. Cigna also asked the court to order defendant medical providers to “submit to Cigna only claims containing charges that Defendants actually charge the plan member as payment in full”. In other words, no medical coverage is available if the member does not pay their entire out of pocket liabilities up front.

Cigna was also seeking the return of any benefit payments, as “overpayments” made to the medical provider where the member did not pay their entire out of pocket liability up front, specifically requesting the court to impose a “constructive trust on monies currently held by Defendants as a result of the overpayments made by Cigna…pursuant to an equitable lien”.

Out of network provider True View Surgery Center One, argued that the issues were already resolved in a previous case litigated in Texas, and that Cigna was attempting to take multiple bites out of the same apple in order to wrongfully deny legitimate medical claims.

The court focused on two main issues: 1) whether Cigna is barred by the doctrine of collateral estoppel from pursuing their claims on behalf of ERISA plans; and 2) whether Cigna has adequately alleged traceability in order to recover alleged “overpayments”

Ultimately, the court agreed with defendant True View Surgery Center One and ruled “Cigna is barred by the doctrine of judicial estoppel” in its attempt to have the courts validate its fee forgiving protocols, and in its attempts to recover alleged “overpayments”

In his decision, Judge Covello cited the Humble case (Connecticut General Life Insurance Co. et al. v. Humble Surgical Hospital, LLC, Case number 4:13-cv-03291) where Cigna was slammed with a $17 million penalty and opined that the district court in Texas had already “addressed the issue” regarding Cigna’s fee forgiving protocols.

In citing the Humble case, the judge said “In Humble, the court held that Cigna’s interpretation of this “exclusionary” language was “legally incorrect,” and that “ERISA does not permit the interpretation embraced by Cigna.”

The judge went on to say that the Texas court found “because ‘[t]he average plan participant would not understand from the exclusionary language…that his/her coverage is expressly conditioned on whether Humble collects upfront, the entirety of his/her deductible, co-pay and co-insurance before Cigna pays,’ Cigna’s “exclusionary” language interpretation does not pass muster under the “average plan participant” test,” which ERISA requires.”.

The judge ultimately holds: “Cigna is relying on the interpretation of its ERISA plans that the United States District Court for the Southern District of Texas held to be ‘legally incorrect’ in order to effectively deny providers’ benefit claims. Therefore, the doctrine of collateral estoppel bars Cigna from relitigating those [issues].”

As part of Judge Covello’s ruling on Cigna’s lack of traceability, in dismissing Cigna’s claim for “overpayments”, we must again look to the Humble case for clarification. According to the Humble court:

Cigna is not entitled to equitable restitution of any alleged overpayments based on the “tracing” method, as it cannot identify any specific res separate and apart from Humble’s general assets. See Health Special Risk, 756 F.3d at 366 (reasoning that “Sereboff did not move away from any tracing requirement; it distinguished between equitable liens by agreement—which do not require tracing—and equitable liens by restitution—which do.”). As the Court explained in Knudson, the basis for petitioners’ claim is “that petitioners are contractually entitled to some funds for benefits that they conferred. The kind of restitution that petitioners seek, therefore, is not equitable…but legal—the imposition of personal liability for the benefits that they conferred upon respondents.”Knudson, 534 U.S. at 214.”

All Out-of-Network providers and self-insured health plans should understand the implications of the court’s rulings in order to protect members and beneficiaries from inappropriate medical debt and bankruptcy and to safeguard and protect self-insured health plan assets from possible conversion, abstraction or “hidden fees”.  Education and understanding of these concepts will bring peace, harmony and compliance to the healthcare industry, especially when health plans are determined to contain healthcare costs and healthcare providers are dedicated to providing all patients with high quality, affordable healthcare when exercising their freedom of choice and right to seek out-of-network care.

For over 7 years, Avym Corp. has advocated for ERISA plan assets audit and embezzlement recovery education and consulting. Now with the Supreme Court’s guidance on ERISA anti-fraud protection, we are ready to assist all medical providers and self-insured plans recover billions of dollars on behalf of hard-working Americans. To find out more about Avym Corporation’s Fiduciary Overpayment Recovery Specialist (FOR) and Fiduciary Overpayment Recovery Contractor (FORC) programs click here.

Another Cigna Administered ERISA Health Plan, DHL Express, Sued for Embezzlement


CIGNA 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, reprehensively competes with the Plan’s own beneficiaries for entitlement to plan funds.”, according to the lawsuit.

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.

Avym Corp. has advocated for ERISA plan assets audit and embezzlement recovery education and consulting. With new Supreme Court guidance on ERISA anti-fraud protection, we are ready to assist all self-insured plans recover billions of dollars of self-insured plan assets, on behalf of hard-working Americans. To find out more about Avym Corporation’s Fiduciary Overpayment Recovery Specialist (FOR) and Fiduciary Overpayment Recovery Contractor (FORC) programs contact us.

Macys, Another Cigna Administered ERISA Health Plan, Sued for Embezzlement, Issuing “Secret Checks”

Macys Inc. and Plan administrator, Stephen J. O’Bryan, were sued and named as defendants in federal court for ERISA violations, for allegedly engaging in a “a systematic embezzlement and/or conversion scheme involving the Plan Assets of the Plan“. This is the second lawsuit filed against Cigna Administered ERISA health plan Macy’s in less than a month.

According to the complaint,

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

The complaint further alleges that “Cigna also issued deceptive and inconsistent documents to Plaintiff and the Patient-Plan Beneficiary, specifically the Provider Explanation of Medical Payment, Provider Explanation of Medical Payment Report, Patient Explanation of Benefits, and Cigna Claim Details Sheet.“.

According to the court documents, Macys, through Cigna, sent EOBs telling the hospital that it would not get paid until it provided proof the patient paid their entire out-of-pocket costs, at the same time, according to the complaint, Macys, through Cigna, sent a different EOB to its member patients telling them they owed nothing!

Case info: REDOAK Hospital, LLC v. Macys Inc., Welfare Benefits Plan and Stephen J. O’Bryan Case Number: 4:16-cv-01783 in the United states District Court for the Southern District of Texas, Houston office Court, Filed June 21, 2016.

The Macys lawsuit, which was filed on June 21, 2016, comes on the heels of two 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” 

The complaint also alleges that Macys and Cigna engaged in a complicated scheme involving “fabricated” Viant repricing discounts. The complaint alleges:

“In addition to the “fee-forgiveness scheme”, Defendants and Cigna also concocted another intricate scheme to abstract and embezzle Plan Assets. Abstraction of the Plan Assets are concealed by processing Plaintiff’s out-of-network claim under a fabricated Viant Repricing Discount, even though Defendants and Cigna are fully aware of the fact that no such contract exists between Plaintiff and Viant.4 Defendants allowed Cigna to convert the full Viant discounted amount from patient-Plan Beneficiary’s Allowed Amount to Cigna’s own use, all while concealing and intentionally misrepresenting to patient-Plan Beneficiary that is has converted the Viant discounted amount through informing patient-Plan Beneficiary that the Viant Discount is $0.00.”

Also, according to court documents, the member is ultimately left holding the bag:

“As a result of the wrongful claim denial schemes concocted by Defendants and Cigna, all of the transferred Plan Assets are ultimately misappropriated by Cigna to fraudulently pay itself with Defendants’ withdrawn Plan Assets by falsely declaring the converted Plan Assets as compensation for itself generated through managed care and out-of-network cost containment “savings”, when in truth and in fact, the claim was never paid to Plaintiff and the patient-Plan Beneficiary is left exposed to personal liability for the full amount of his unpaid medical bills.”

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. The courts have provided clear guidance regarding Cigna’s “fee forgiving protocol” which has been a thorny issue for out-of-network providers across the nation and now, self-insured plans are starting to feel the pain of these potentially illegal practices.

Medical providers must be proactive and adopt compliant practices and policies. Health plans must also be proactive in validating that plan assets get returned to their plan, and not applied to cover shortfalls in another plan.

Avym Corp. has advocated for ERISA plan assets audit and embezzlement recovery education and consulting. With new Supreme Court guidance on ERISA anti-fraud protection, we are ready to assist all self-insured plans recover billions of dollars of self-insured plan assets, on behalf of hard-working Americans. To find out more about Avym Corporation’s Fiduciary Overpayment Recovery Specialist (FOR) and Fiduciary Overpayment Recovery Contractor (FORC) programs contact us.

 

 

 

Over 100 CIGNA Administered Self-insured ERISA Health Plans Sued for Embezzlement-Health Plan Litigation Tsunami

Just eight days after a federal court slammed CIGNA with a $13M judgement, 113 of CIGNA’s self-insured clients, along with their Plan Administrators have been named as defendants in a massive fraud lawsuit, alleging the plansparticipated in a conspiracy and pattern of unlawful, reckless, and deceptive conduct to conceal an embezzlement and/or skimming scheme”.

According to court documents:

“Defendants never monitored or tracked the specific fees that Cigna was paying to itself and never required Cigna to itemize and account for the financial transactions made by Cigna in sufficient detail. Thus for any given claim, Defendants blindly permitted Cigna to withdraw plan funds for payment of the claims, but failed to track the true, actual amounts Cigna paid to itself.

This massive lawsuit comes on the heels of an unprecedented $13.7M ruling against CIGNA 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.

Case info: True View Surgery Center One LP et. al v. MILA National Health Plan et.al, Case Number: 4:2016 cv01648 in the United states District Court for the Southern District of Texas, Houston office Court, Filed June 9, 2016.

This case is filed against CIGNA administered health plans and names the plan administrators individually. Among the defendants are many large, well known, national companies that reach across different sectors of the economy, from banking to manufacturing to retailers. Household names such as,  JP Morgan Chase, Chevron, Macy’s, Valero, BASF, Waste Management, Stanley Black and Decker and even Teach for America, were named as well as other smaller less recognized organizations. All have one thing in common: all are CIGNA administered self-insured health plans.

This latest case seems to be the culmination of a spate of recent cases alleging similar violations. This troubling pattern may be an indication that no employer sector is immune to possibly fraudulent claims processing practices. All of this seems to provide more evidence of increased scrutiny for self-insured health benefits, that has long been commonplace for retirement benefits.

The complaint alleges:

Defendants processed claims and determined that certain claim amounts were allowed under the Plans, yet those allowed claims payments were never made to Plaintiffs and instead [were] withheld by Cigna.

The complaint further alleges that the plans and their co-fiduciary Cigna advised patients and plaintiff medical providers, through the EOB’s, that if patients failed to pay the full cost-sharing, or out of pocket liabilities, at the time of their admission, the benefit claims payment would be withheld indefinitely by Cigna until medical providers submitted proof of full payment of the patient’s cost-sharing or out of pocket liabilities. And in a particularly nefarious maneuver, the plans and their co-fiduciary Cigna simultaneously advised patients they had no obligation to pay! Consequently, the medical provider plaintiffs would have nothing to forgive upfront or nothing to collect from the patient, according to the complaint.

The medical provider plaintiffs further argue: “In spite of the glaring conflict of interest and inherent breach of fiduciary duties, defendants allowed the wrongful withholding of plan benefit payments from Plaintiffs and agreed to an unlawful compensation structure that financially rewards Cigna.”, according to court records.

Most troubling are accusations that the Plans, even after being alerted to these potentially illegal practices and despite formal complaints being lodged with the DOL, astonishingly continued to delegate and authorize Cigna, to investigate its own alleged wrongdoing!

The complaint also alleges, “When defendants were confronted about this “withholding” of the Entitled Amount, instead of outright refuting the assertion, their co-fiduciary’s counsel stated “Replete throughout your letter is [plaintiff’s] contention that Cigna does not have the legal right or authority to withhold the payment benefits . . . [i]n fact, Cigna has every right to do so.

The complaint goes on to say, “Defendants allow funds from the Plans to be withdrawn under the guise of a “savings” compensation structure as a means to cloak blatant misappropriation of funds. That is defendants colluded with Cigna to apply a fake 100% “negotiated discount” of Plaintiff’s billed charges. Defendants, through Cigna, applied a fabricated contractual Obligation (“CO”) code.”

All ERISA health plans, medical providers and patients must educate themselves in order to understand the facts of these cases. For years, Cigna’s “fee forgiving protocol” has been a thorny issue for out-of-network providers across the nation and now, self-insured plans are starting to feel the pain of these potentially illegal practices.

Medical providers must be proactive and adopt compliant practices and policies. Health plans must also be proactive in validating that plan assets get returned to their plan, and not applied to cover shortfalls in another plan.

Avym Corp. has advocated for ERISA plan assets audit and embezzlement recovery education and consulting. With new Supreme Court guidance on ERISA anti-fraud protection, we are ready to assist all self-insured plans recover billions of dollars of self-insured plan assets, on behalf of hard-working Americans. To find out more about Avym Corporation’s Fiduciary Overpayment Recovery Specialist (FOR) and Fiduciary Overpayment Recovery Contractor (FORC) programs contact us.

 

Cigna Fraud Lawsuit Against Hospital Backfires- Cigna slammed with $13M Judgement in Medical Claims Dispute

In a monumental decision for Out-Of-Network Providers nationwide, on June 1, 2016, U.S. District Judge Kenneth Hoyt of the Southern District of Texas ruled against Cigna and ordered the insurer to pay $11.4 million to cover underpaid claims and, an additional $2.3 million in ERISA penalties, in perhaps the first instance where a claims administrator was ordered to pay ERISA penalties to a medical provider.

U.S. District Judge Hoyt, after a nine day bench trial, ruled that Cigna’s claims of overpayment and fee forgiveness fraud failed, as did its arguments against Humble Surgical Hospital’s (Humble) ERISA claims. According to court records:

Based on the analysis and reasoning set forth herein, the Court determines that Cigna’s claim(s) for reimbursement of overpayments made pursuant to ERISA and/or common law fail, as a matter of law;”.

The court goes on to say, “The Court further concludes that Cigna’s defenses to Humble’s ERISA claims fail and Humble is entitled to recover damages under § 502(a)(1)(B)1 and penalties under § 502(c)(1)(B).

Case info: Connecticut General Life Insurance Co. et al. v. Humble Surgical Hospital, LLC, (Cigna v. Humble) Case number 4:13-cv-03291, in the U.S. District Court for the Southern District of Texas. Entered June 01, 2016

This decision represents a major paradigm shift in Out-of-Network benefits and claim processing for all health care providers and health plans in the nation and establishes clear guidance on critical issues such as cross-plan offsetting, Cigna’s fee forgiveness protocol, SIU practices and ERISA disclosure requirements. The decision sheds light on the payor initiated “out-of-network fraud” enigma and is one of a series of critical court decisions which address the typical scenario for out-of-network providers: payors refusal to pay claims which leads to “catch-all” out-of-network lawsuits seeking total overpayment refunds of claims previously paid to providers , all based on broad and vague allegations of fraud.

At its core, this court decision provides the entire managed care and plan benefits industry with basic, yet comprehensive legal reasoning and essentially offers a roadmap to addressing modern-day healthcare litigation.

In his ruling, U.S. District Judge Kenneth Hoyt wrote that the health insurer initiated the litigation seeking $5.2 million in restitution and filed claims against the hospital, alleging it engaged in fraudulent out-of-network billing practices, which resulted in “overpayments”.  

Humble denied the allegations and countersued Cigna for (a) nonpayment of current member/patient’s claims, underpayment of certain claims, and delayed payment of all claims in violation of ERISA § 502(a)(1)(B); (b) failure to provide a full and fair review under ERISA; (c) breach of fiduciary duties of loyalty and care under ERISA; and (d) penalties pursuant to ERISA § 502(c,), according to the court documents.

This landmark decision has the potential to save millions of Americans from medical bankruptcy. Additionally, it illustrates one of the most pressing issues facing out-of-network patients and providers across the nation.  Payor initiated Deductible and Co-Pay waiver claim denials and overpayment recoupments or offsets is the No. 1 out-of-network claim denial, contributing to increases in the number of personal bankruptcies. According to many recent surveys, reports and case studies, one in five American adults will struggle to pay medical bills. In fact, medical bills are the leading cause of personal bankruptcy, affecting even those with health insurance. Subsequently, approximately 76% of Americans paid for out-of-network coverage through their employer-sponsored health plans, according to a December 2013 National Composition Summary from DOL Bureau of Labor Statistics. It’s clear that the epidemic of out-of-network deductible balance billing wrongly imposed by ERISA plans has inevitably contributed significantly to unexpected medical bills and personal bankruptcy.

According to the court records, the evidence clearly demonstrated that Cigna flagged Humble’s claims, for SIU processing, never told the hospital and “did not –and by its conduct—could not provide a reasonable meaningful opportunity for a full and fair review of its decision regarding Humble’s claims.”

“Cigna’s method for processing Humble’s claims was simply disingenuous and arbitrary, as it was focused more on accomplishing a predetermined purpose — denying Humble’s claims,”

Cigna argued that it could assert its claim based on the plans “overpayment” provisions, according to the court documents: “Here, Cigna relies on a provision within many of its plan documents entitled, “Recovery of overpayment,” which provides, “When an overpayment has been made by Cigna, Cigna will have the right at any time to: recover that overpayment from the person to whom or on whose behalf it was made; or offset the amount of that overpayment from a future claim payment.”

However, the court rejected that argument, “However, this provision, standing alone, is insufficient to create a lien or constructive trust as it does not: mention the words “lien” or “trust”; state that any overpayment shall constitute a charge against any particular proceeds; give rise to a security interest in such proceeds; even suggest that a trust is being sought for Cigna’s and/or the plan’s benefit on any particular provider payments; or advise of the need for any particular provider to preserve, segregate or otherwise hold such funds or proceeds in trust…Therefore, the Court determines that Cigna has failed to establish that the “Recovery of Overpayment” provision contained in its plan documents creates a constructive trust or equitable lien by agreement.”

Of critical importance is the court’s analysis and decision on Cigna’s “tracing” arguments as well. According to court records, “Cigna is not entitled to equitable restitution of any alleged overpayments based on the “tracing” method, as it cannot identify any specific res separate and apart from Humble’s general assets. See Health Special Risk, 756 F.3d at 366 (reasoning that “Sereboff did not move away from any tracing requirement; it distinguished between equitable liens by agreement—which do not require tracing—and equitable liens by restitution—which do.”). As the Court explained in Knudson, the basis for petitioners’ claim is “that petitioners are contractually entitled to some funds for benefits that they conferred. The kind of restitution that petitioners seek, therefore, is not equitable…but legal—the imposition of personal liability for the benefits that they conferred upon respondents.”Knudson, 534 U.S. at 214.”

The court also weighed in on Cigna’s “fee forgiving “argument, “The plan language does not support denying Humble’s claims based on waiver, due to Humble’s alleged fee-forgiving policy, or, in Cigna’s own novel view, pursuant to a proportionate share analysis.”

Next, the court weighed in on Cigna’s arguments that Humble’s claims were not covered by the plans based on Exclusionary language in the plan documents: “Cigna has not offered evidence that any of the services billed by Humble were not covered by the plans or that they were improperly billed Therefore, Cigna’s interpretation of the “exclusionary” language as rejecting covered services, was improper and violative of the plans’ terms.” “For these reasons, the court determines that Cigna improperly applied the exclusionary language contained in the plans and, in the process, abused its discretion, especially since Cigna admittedly has never used the exclusionary language to reject covered services before and was relentless in engaging in an arbitrary manner with regard to Humble and its claims.”

“Finally, the evidence suggests that Cigna failed to explain to the plan sponsors and/or members/patients/insureds that it was applying a proportionate share analysis to Humble’s claims. Thus, Cigna breached its fiduciary duty when it strayed from the terms of the plans and interpreted its ASO Agreements with plan sponsors as conferring authority upon it that was not specifically set forth in and/or was contrary to the various plans.”

Fallen black chess king on chess board.Essentially, CIGNA was “Checkmated” on all their arguments

Ultimately, the court ruled against Cigna on every major argument and consistent with previous appellate court decisions, provides step by step guidelines on whether Cigna’s “fee forgiveness protocol” and “overpayment offsets” are legally correct,
“Therefore, the Court holds that Cigna’s claims processing procedure and appeals review process violated ERISA and concomitantly, its fiduciary duty of care and loyalty to the members/patients and the plan sponsors. Indeed, Cigna earned handsome returns as a result of its aberrant and arbitrary claims processing methodology. The evidence establishes that it was subject to a double heaping from the plan sponsors’ pockets—first, in receiving a fee for claim processing services–and second, in receiving fees based on “savings,” regardless of how garnered. In the process, however, Cigna forfeited its objectivity and violated its fiduciary duties of care and loyalty by making benefit determinations that did not consider UCR or conform to the plans’ terms in violation of ERISA.”

The court also made an interesting observation regarding Cigna’s third party vendor negotiation and Cigna’s claim that Humble misrepresented the charges: “Cigna’s assessment of Humble’s disclosure duties is fallacious, at best. The fallacy is manifested in several respects. First, Cigna has not publicly disclosed its ASO Agreements with plan providers to any of its members/patients or third-party healthcare providers because it considers such documents to be proprietary as well. To this end, Cigna cannot expect unfettered access to contracts maintained by third-party healthcare providers without permitting them unrestricted access to the same. To require otherwise would be to reward Cigna’s duplicitous conduct.”

Finally, Humble claimed that it was entitled to ERISA penalties, arguing “Cigna’s refusal to provide such plan documents placed it at a serious disadvantage–both in defending against Cigna’s claims for overpayment and in recovering on its own claims for underpayment. “

The court agreed and issued a substantial penalty on Cigna for failing to Disclosure the Plan Terms reasoning: “The Court is of the opinion that, after October 2010, Cigna became more than a third-party “claims administrator” because of the manner in which it processed Humble’s claims. While the evidence establishes that Cigna is not the “designated” or named plan administrator it, nevertheless, became the de facto plan administrator by way of its conduct and admissions under an ERISA-estoppel theory.”

The court concluded:  “Without plan documents, Humble could not know whether Cigna was even processing its claims pursuant to the terms of the plans…In these respects, Cigna interfered with and frustrated the contractual relationship between the plan sponsors and the members/patients by imposing a methodology for claim processing that was not part of any plan.

In essence, Cigna “hijacked” the plan administrator’s role and subverted it for its personal benefit. Indeed, Cigna’s unprecedented claims processing methodology and incessant related acts were extraordinary acts of bad faith.”

All Out-of-Network providers and self-insured health plans must understand this landmark case in order to protect members and beneficiaries from inappropriate medical debt and bankruptcy and to safeguard and protect self-insured health plan assets from possible conversion or abstraction.  Education and understanding of this landmark court decision will bring peace, harmony and compliance to the healthcare industry, especially when health plans are determined to contain healthcare costs and healthcare providers are dedicated to providing all patients with high quality, affordable healthcare when exercising their freedom of choice and right to seek out-of-network care.

For over 6 years, Avym Corp. has advocated for ERISA plan assets audit and embezzlement recovery education and consulting. Now with the Supreme Court’s guidance on ERISA anti-fraud protection, we are ready to assist all medical providers and self-insured plans recover billions of dollars on behalf of hard-working Americans. To find out more about Avym Corporation’s Fiduciary Overpayment Recovery Specialist (FOR) and Fiduciary Overpayment Recovery Contractor (FORC) programs click here.

 

 

Federal Court Allows Self-Insured Health Plan’s ERISA Lawsuit Against Cigna for Self-Dealing and Prohibited Transactions

Federal judge allows ILWU-PMA, a self-insured health plan, to move forward in lawsuit against Cigna and Carewise for allegedly engaging in “prohibited transactions” and “self-dealing” by entering into “auto-discount agreements with providers for which it received a portion of the amount discounted”

As healthcare admin fees increase, more and more self-insured health plans are looking to engage in out of network “cost containment” or third party “repricing agreements” with out of network provider claims, in an effort to lower costs or save money.However, plaintiff’s allegations in this and other recent cases, shed light on possible abuses that take place disguised as legitimate practices.

On Dec 22, 2015, a Northern District of CA Federal court ruled in favor of a self-insured health plan and allowed an ERISA lawsuit to go forward against Cigna and third party fee negotiating company, Carewise (formerly called SHPS Health Management Solutions, Inc.). Cigna and Carewise were sued by the ILWU-PMA Welfare Plan Board of Trustees and ILWU-PMA Welfare Plan, for alleged ERISA “prohibited transactions” and “self-dealing”

Case info: ILWU-PMA Welfare Plan Board of Trustees v. Cigna and Carewise, U.S. District Court for the Northern District of CA Civil Docket for Case #:C15-cv-02965-WHA, Filed 12/22/2015.

This lawsuit against Cigna in ERISA healthcare claims disputes comes on the heels of another recent lawsuit against a different Cigna administered self-insured ERISA plan client, CB&I and its Plan Administrator, Dennis Fox, who were sued for alleged ERISA plan assets embezzlement, deceptively concealed through “fake PPO (CO) discounts” and Cigna’s “fee forgiveness protocol scam”.

TPA’s tactics of engaging in prohibited transactions, self-dealing or applying non-existent or “fake” PPO discounts can expose the plans and plan administrators to costly litigation as well as civil criminal liability. As these lawsuits become more prevalent, self-insured health plans should be aware of possible embezzlement or conversion of plan assets and act accordingly.

According to industry experts, and as illustrated in the Hi-Lex case, a BCBS survey was conducted and found that 83 percent of its self-insured clients were completely unaware of the hidden fees. Other documents revealed a course of conduct designed to conceal evidence of the company’s wrongdoing. Based on the foregoing, all self-insured health plans nationwide should look to recover at least $30 to $45 billion in Plan Asset refunds from the past 10 years of successful plan assets TPA/ASO anti-fraud recoupments and managed care savings in the private sector.

According to the court documents in the ILWU-PMA v. Cigna case:

The Board’s…claims allege Carewise engaged in prohibited transactions under ERISA. Specifically, claims four and five allege that Carewise engaged in self-dealing as a plan fiduciary by entering into auto-discount agreements with providers for which it received a portion of the amount discounted”… “Moreover, by implementing auto-discounts, rather than negotiating claims on a case-by-case basis, Carewise received compensation for fee-negotiation services it never actually performed. Plaintiffs have adequately alleged that Carewise received unreasonable compensation for negotiation services it did not perform. Accordingly, Carewise’s motion to dismiss the plaintiffs’ sixth claim is hereby DENIED.

The court goes on to say:

The Board’s sixth claim alleges that Carewise engaged in a prohibited transaction in violation of Section 1106(a)(1)(C) of Title 29 of the United States code. Section 1106(a)(1)(C) generally prohibits transactions between an ERISA plan and a “party in interest” although Section 1108 allows such transactions for “services necessary for the establishment or operation of the plan, if no more than reasonable compensation is paid” for services rendered by the party in interest. Section 1002(14)(B) defines a “party in interest” as “a person providing services to [a] plan

Interestingly, ILWU-PMA Coastwise Trustees, Cigna, TPA Zenith American Solutions and TC3 Health were all slapped with a class action lawsuit in mid 2015 for various ERISA violations. According to that complaint, the ILWU-PMA and Plan’s own independent fact finder confirmed there were “286,000 unprocessed claims” at one point and the “backlog became worse, with about 90,000 new claims each month” added to the backlog.  The suit also alleges that the plan attempted to  “delay processing of legitimate claims, increasing interest income for the Plan’s fund” as well as create the “misimpression that the PMA Trustees have been diligent in the exercise of their fiduciary obligations”, according to court documents.

In accordance with these lawsuits and national epidemic of self-insured health plan assets embezzlements, self-dealing and prohibited transactions, Avym Corporation (Avym) announces cutting edge, unconventional Fiduciary Overpayment Recovery programs for private self-insured health plans. In 2011 private health insurance funded approximately 33% and Medicare funded approximately 21% of the $2.7 trillion national healthcare expenditure. Approximately 82.1% of all large health plans (>500) are self-insured. Avym’s innovative new programs consist of:

  • The Fiduciary Overpayment Recovery Specialists (FOR) training program which is designed for private self-insured plans.
  • The Fiduciary Overpayment Recovery Contractor (FORC) program which is designed to create partnership networks nationwide to immediately offer FOR programs to self-insured plans.

These groundbreaking programs are unique and unlike any other traditional health plan overpayment auditing programs and are designed to recover alleged overpayments, regardless of the reason including allegations of fraud, that have been recouped by the TPA’s but have not been restored or refunded to the ERISA plan assets as required under ERISA statutes and fiduciary responsibilities.

Over the past 6 years, Avym has closely followed the decisions from the Supreme Court and federal appeals courts on ERISA prohibited self-dealing against ERISA plan TPA’s for managed care savings. These new ERISA embezzlement cases are just the initial impact of the court’s Hi-Lex decisions. This lawsuit in particular should serve as a warning and wake up call for all Plan Administrators to continually monitor their TPAs in accordance with the Plan Administrator’s statutory fiduciary duties and to discharge its duties with respect to a plan solely in the interest of the participants for the exclusive purpose of providing benefits to them.

Avym Corp. has been at the forefront and advocated for ERISA plan assets audit and embezzlement recovery education and consulting. Now with the Supreme Court’s guidance on ERISA anti-fraud protection, we are ready to assist all self-insured plans recover billions of dollars on behalf of hard-working Americans. To find out more about Avym Corporation’s Fiduciary Overpayment Recovery Specialist (FOR) and Fiduciary Overpayment Recovery Contractor (FORC) programs click here.

Cigna Administered ERISA Plan Sued for Embezzlement in Out Of Network Medical Claims Disputes-Cautionary Tale for All Self-Insured Health Plan Administrators

This bellwether lawsuit in ERISA healthcare claims disputes presents a cautionary tale for all self-insured plan administrators with “Head in the Sand” TPA monitoring practices. Cigna administered self-insured ERISA plan, CB&I and its Plan Administrator, Dennis Fox, were sued for alleged ERISA plan assets embezzlement, deceptively concealed through “fake PPO (CO) discounts” and Cigna’s “fee forgiveness protocol scam”.

On Oct. 29, 2015, in southern district of Texas Federal Court, a Cigna administered self-insured ERISA plan, CB&I and its Plan Administrator, Dennis Fox, were sued by an out-of-network (OON) surgical center, True View Surgery Center One, for alleged ERISA plan assets embezzlements, deceptively concealed with alleged “fake PPO (CO) discounts” and “fee forgiveness protocol scam”. This innovative and cutting edge ERISA health Plan lawsuit, by an OON healthcare provider for alleged plan assets embezzlement by the ERISA plan’s third party claim administrator (TPA), was filed just eight (8) days after a different self-insured plan filing on a similar lawsuit, (FAC on Oct. 21, 2015), against the plan’s TPA for allegedly similar plan assets conversion with respect to OON claims administration between the ERISA plan and TPA.

According to the court documents:

“Under this backdrop, together Defendants and Cigna concocted an intricate scheme to transfer and embezzle plan funds. Transfers are first concealed by processing out-of-network claims under a fabricated Preferred Provider Organization (PPO) “contractual obligation,” even though Defendants and Cigna are fully aware that no such contract exists. Then, Defendants and Cigna knowingly implemented a system to willfully and wrongfully refuse payments to the out-of-network provider under a sham “fee-forgiveness” protocol.”

In pursuance of this signpost lawsuit, Avym Corp. announces a new division of its ERISA litigation support and/or prevention program, in order to:

  1. Closely track this type of unprecedented but most dramatic emerging trend in ERISA healthcare litigation in today’s evolving managed care market including:
    • Analyze new litigation allegations of plan assets embezzlement to be made by plan sponsors and plan administrators, healthcare providers and federal regulatory and enforcement agencies against TPAs;
    • Understand managed care TPA litigation defense strategies and trial evidence;
    • Decipher court decisions and alternative resolutions to this new trend in the alleged conflict in ERISA prohibited transaction against health plan TPA’s for managed care costs containment and savings tactics;
  2. Demystify these new lawsuits and the implications to plan sponsors and providers, specifically, how the lawsuit will ultimately impact all out-of-network claim disputes.

It is standard industry practice for self-insured health plans to engage in out of network “cost containment” or third party “repricing agreements” with out of network providers, in an effort to lower costs or save money. However, plaintiff’s allegations shed light on possible abuses that take place disguised as legitimate practices. TPA’s tactics of applying non-existent or “fake” PPO discounts are very familiar to all out-of-network medical providers. According to court documents:

“The self-dealing embezzlement scheme perpetrated by Cigna and Defendants is even more repugnant because Cigna duplicitously demands proof from the provider that it collected the patient’s co-insurance and deductibles in full when it explicitly instructed the provider not to bill the patient.”

Over the past 5 years, Avym has closely followed the decisions from the Supreme Court and federal appeals courts on ERISA prohibited self-dealing against ERISA plan TPA’s for managed care savings. These new ERISA embezzlement cases are just the initial impact of the court’s Hi-Lex decisions. This lawsuit in particular should serve as a warning and wake up call for all Plan Administrators to continually monitor their TPAs in accordance with the Plan Administrator’s statutory fiduciary duties and to discharge its duties with respect to a plan solely in the interest of the participants for the exclusive purpose of providing benefits to them.

The Court Case info: True View Surgery Center One L.P., v.Chicago Bridge And Iron Medical Plan, Chicago Bridge And Iron Company, And Dennis Fox, Case #: 3:15-CV-00310, filed on Oct. 29, 2015, in the United States District Court For The Southern District of Texas.

In the Oct 29, 2015  lawsuit filed by OON provider True View Surgery Center, against the Cigna administered ERISA plan, the Plaintiff alleged in part:

“Specifically, 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. Transfers are first concealed by processing out-of-network claims under a fabricated Preferred Provider Organization (PPO) “contractual obligation,” even though Defendants and Cigna are fully aware that no such contract exists. Then, Defendants and Cigna knowingly implemented a system to willfully and wrongfully refuse payments to the out-of-network provider under a sham “fee-forgiveness” protocol. As a result of the wrongful claims denials, the transferred plan funds are ultimately misappropriated by Cigna, who then fraudulently pays itself with the plan funds, falsely declaring the embezzled funds as compensation generated through managed care and out-of-network cost containment “savings,” when in truth the claims were never paid and the plan beneficiaries were left exposed to personal liability for their unpaid medical bills.”

On Oct 21, 2015, in a separate but similar lawsuit filed by an ERISA plan against a separate ERISA plan TPA, the Plaintiff alleged in part:

“MagnaCare represented to Plaintiffs in a written contract between the parties that providers of diagnostic laboratory and ancillary services had “accepted” a “fee schedule” which included a “management fee” for MagnaCare. In fact, the providers had never “accepted’ a fee schedule containing a “management foe” for MagnaCare. Rather, the providers had agreed to a fee schedule, which was a fraction of the amounts collected by MagnaCare from Plaintiffs. MagnaCare – without disclosure to Plaintiffs or the providers – simply misappropriated the difference between what Plaintiffs paid MagnaCare and what MagnaCare negotiated to pay the providers.” 

Court case info: UNITED TEAMSTER FUND, et al v. Magnacare Administrative Services, LLC et al, Case 1:13-CV-06062-WHP-FM, First Amended Complaint (FAC), filed on Oct. 29, 2015, original Complaint, filed on august 27, 2013,  in United States District Court Southern District Of New York.

These lawsuits come on the heels of the Oct. 20, 2014 U.S. Supreme Court decision to deny all appeals on a BCBSM’s $6.1 million fraud judgment for a self-insured ERISA plan by the U.S. Court of Appeals for the Six Circuit, upholding the decision by the District Court for the Eastern District of Michigan.

On May 14, 2014, a federal appeals court (Sixth Cir. 2014) upheld the district court’s $6.1 million decision for Hi-Lex, a self-insured ERISA plan against BCBSM for violating ERISA in prohibited transactions and fiduciary fraud, according to the court documents.

Hi-Lex Controls, Inc. v. Blue Cross Blue Shield of Michigan, ((SC Case #. 14-168, 6th Cir. Case #: 13-1773, 13-1859).

For over 6 years, Avym Corp. has advocated for ERISA plan assets audit and embezzlement recovery education and consulting. Now with the Supreme Court’s guidance on ERISA anti-fraud protection, we are ready to assist all self-insured plans recover billions of dollars on behalf of hard-working Americans. To find out more about Avym Corporation’s Fiduciary Overpayment Recovery Specialist (FOR) and Fiduciary Overpayment Recovery Contractor (FORC) programs click here.

 

CIGNA Out-Of-Network Claim Denials Implicate PPACA Non-Discrimination “Life Preserver” Protections

A recent Federal 5th Circuit Court decision thwarted CIGNA’s potentially discriminatory “out of network protocol” policy against non-contracting providers and facilities. The decision allows properly assigned out-of-network providers Article III legal standing to sue and to challenge CIGNA’s potentially discriminatory “out of network protocol” under ERISA.

The 5th Circuit Appellate court questioned whether CIGNA’s denial of claims to Out of network providers who did not collect all patients’ deductibles and co-payments but NON denial of claims for in network providers who did the same (also known as CIGNA’s “fee-forgiving protocol” to reduce payments) violated ERISA anti-discrimination laws. According to the court:

 “Also relevant is whether Cigna denied all coverage to patients who were not charged or ‘billed’ for their copays or coinsurance by in-network providers.”

Health plan discrimination is not only wrong in principle, but is without justification based on the quality of health care provided by non-contracted providers. All patients should have the right to choose and be reimbursed for all health care services provided by non-contracted providers without impediments and limitations that unfairly restrict their freedom of choice. Anti‐competitive and discriminatory obstacles only serve to drive up costs, limit patient choice and erode the quality and necessity of health of care.

According to the Senate Committee on Appropriations Report dated July 11, 2013, “The goal of [section 2706 of the PHS act] is to ensure that patients have the right to access covered health services from the full range of providers licensed and certified in their State.”

Since its inception in 2010, the Patient Protection and Affordable Care Act (PPACA) claims regulation adopted longstanding ERISA claims regulations in their entirety for all health plans.

PPACA §2706 specifically prohibits plan’s discrimination against any health care providers solely based on their participation in plan TPA’s PPO networks with respect to health plan coverage when they are acting within the scope of their license under state laws. Section 2706 applies to all employee health benefit plans (insured and self-insured) and all health insurance policies.

Section 2706(a) of the Public Health Service Act preserves those protections by creating a federal provider non-discrimination provision that applies to all plans regulated by PPACA. Section 2706(a) prohibits insurance providers from discriminating, with respect to participation under the plan or coverage against health care providers acting within the scope of their state license of certification.

`SEC. 2706. NON-DISCRIMINATION IN HEALTH CARE.

`(a) Providers- A group health plan and a health insurance issuer offering group or individual health insurance coverage shall not discriminate with respect to participation under the plan or coverage against any health care provider who is acting within the scope of that provider’s license or certification under applicable State law.

`(b) Individuals—The provisions of section 1558 of the Patient Protection and Affordable Care Act (relating to non-discrimination) shall apply with respect to a group health plan or health insurance issuer offering group or in-dividual health insurance coverage.(http://www.dol.gov/ebsa/pdf/affordablecareact.pdf page 97)

As established by this landmark 5th Circuit Court ERISA ruling, federal courts have clarified, for the first time, ERISA anti-discrimination protections for both in and out-of-network patients and providers. Furthermore, this court decision may have exposed a fundamental legal flaw in the nation’s managed care business model.

The implications of this case will reverberate across the healthcare industry. It will have profound ramifications for all professionals involved in healthcare including insurance carriers, medical providers, plan sponsors, plan administrators, TPA’s, attorneys and of course patients.

Avym Corporation promotes  new ERISA out-of-network specialist programs and litigation support services to assess, educate and comply with this appellate court ERISA decision. This decision is a true harbinger of things to come and can be used as a “crystal ball” to help understand alleged out of network fraud mysteries.

Avym Corporation provides comprehensive and in-depth assessments of this landmark decision and will demystify ERISA legalese for both non-lawyer healthcare providers and seasoned healthcare attorneys. This is a critical court decision, which addresses a typical scenario for out of network providers: refusal to pay claims then a catch-all, out of network lawsuit seeking complete overpayments based on broad and vague allegations of fraud.

Avym is dedicated to empowering providers with ERISA appeal compliance and ERISA litigation support in all cases as well as ERISA class actions.  All medical providers and Plans should understand several critical issues regarding the profound impact of this final court decision on the nation’s No. 1 health care claim denial – overpayment demand recoupment and offsetting; including how to correctly appeal every wrongful overpayment demand and subsequent claims offsetting with valid ERISA assignment and the first ERISA permanent injunction.  In addition, when faced with pending litigation and or offsets or recoupments, providers should look for proper litigation support against all wrongful overpayment recoupment and offsetting, to seek for enforcement and compliance with ERISA & PPACA claim regulations.

For more information or to contact AVYM