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

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.

 

mflores

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6 comments

Tim Doran

Cigna has not paid most if not all substance abuse providers nation wide using a first audit then claiming fraud for fee forgiving !
It has been going on for 2 years
I am comfortable saying over 209 providers under audit at average non payment from Cigna 2 million total fraud by Cigna 400 million
Plus denying Cigna patients access to these facilities reusing claims for last 18 months
All claims were ore authorized by Cigna
This is a massive fraud committed by Cigna nation wide
The question is why hasn’t Department of labor or justice stepped in
This is ripe for a Rico investigation !

    Mloftus

    Why, because congress is in bed with the insurance companies and everyone else who has tons of money to throw at them. The health insurance industry is paid based on spend, the more they spend, the more they make (or keep). On average the carriers keep 15.6%. What do you want 15.6% of 100 million, or 1 billion? This is not rocket science, it’s Obamacare buying votes and power. That the big challenge with the GOP, what hand do they bite, Pharma, Insurance companies, Hospitals, Attorneys?

      Jae

      What plan makes over 15% margin? I’d like to go work for them. No argument here on some of what you are saying but outlining those will deflect from the exaggeration of 15+% Estimates of average insurance net margin are between 3 and 8%, with a median average around 4 to 5%. It’s true that health, property and casualty insurance (which includes auto insurance) tend to provide higher profit margins than life insurance.

    Jim McGuinness

    Hello – are you the same Tim Doran who was with the DOL in Wayne County, MI?

    Jim in Saginaw

Kendra Alexander

Hello, I’m going through a tough time with Cigna myself for my short term disability that was denied. Can a class action lawsuit lawyer against Cigna contact me

RM, R.N.

Hello,

I am a RN with 20+ years in the medical field. I have been worked by Cigna and by
a CSA for the last 6 months after Cigna “ERISA” regularly refuses to process out of network claims for multiple reasons and paper myself and physician over and over with denials.
Any appeal that I asked for was simply “re-processed” as a “duplicate” A0 or A1.
Multiple calls, transfer’s, plea’s and mostly denials. PPO with high
premiums and basically no way to meet huge deductibles given the teeny amount that Cigna claims processor may or may not have allowed towards care (same physician)!
I am so stressed out and fed up and as a patient advocate with years of experience
I feel like I have been robbed in a boiler room operation…. It is a total train wreck.Just wish the whole system would fail. I had no FSA or HSA for the last two years which compounded my losses. There are so many complaints online and I’m just another!

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