Patient Support & Advocacy

Patients, doctors sue to hold Cigna accountable for underpayments

Tanya Albert Henry , Contributing News Writer

In an effort to shed light on misconduct by one of the nation’s largest health insurance plans, patients and physicians have filed a proposed class-action lawsuit (PDF) alleging the company intentionally underpaid patients’ medical claims.

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The Litigation Center of the American Medical Association and State Medical Societies, the Medical Society of New Jersey (MSNJ) and the Washington State Medical Association (WSMA) in September became plaintiffs in the lawsuit alleging that Cigna failed to pay the medical claims based on physicians’ contracts with MultiPlan Corp. Instead, Cigna applied its own, lower payment methodology for nonparticipating physicians and other health professionals. That move left patients exposed to balance billing for physician and other health service fees.

“Patients and physicians have a right to expect health insurers to uphold their promise to provide fair and accurate payment for medical services. But alleged misconduct by Cigna has allowed the insurer’s economic self-interest to be prioritized ahead of their promises to physicians in the MultiPlan Network and their patients,” said AMA President Jack Resneck Jr., MD.

The AMA, MSNJ and WSMA “allege that Cigna’s misconduct is riddled with conflicts of interest and manipulations that routinely shortchanged payments to MultiPlan Network physicians and interfered with the patient-physician relationship.”

The AMA Litigation Center and others filed the lawsuit, AMA/Stewart v. Cigna, in the U.S. District Court for the District of Connecticut and they seek a jury trial.

Find out more about the cases in which the AMA Litigation Center is providing assistance and learn about the Litigation Center’s case-selection criteria.

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With more than 1.2 million physicians and other health professionals, MultiPlan is the nation’s largest “third-party network” company. Doctors and other health professionals sign contracts with MultiPlan agreeing to accept a set percentage of their billed charges as full payment. In other words, they agree not to hold the patient liable for the difference between the original amount charged for the service and the discounted rate, a practice commonly known as balance billing.

In turn, MultiPlan enters into contracts with its clients, health benefit plan issuers and claims administrators like Cigna to provide them access to a MultiPlan network. Providers who join a MultiPlan network indirectly contract with MultiPlan’s clients, such as Cigna.

Cigna advertises its relationship with MultiPlan to its insured by, among other things, placing a MultiPlan logo on insurance cards that Cigna plan members receive. The lawsuit notes that Cigna sometimes applies the MultiPlan contracted rates when it processes claims, but not always.

It’s the claims that they say Cigna failed to apply the contracted rates to that the AMA, MSNJ, WSMA and patients are challenging in court.

By not paying claims based on the MultiPlan contracts, Cigna “breached its fiduciary duties, including its duty to honor written plan terms and its duty to loyalty, because its conduct serves Cigna’s own economic self-interest and elevates Cigna’s interest above the interests of plan member patients,” the lawsuit alleges.

That, physicians and patients claim, violates the Employee Retirement and Income Security Act of 1974 (ERISA). That federal law requires Cigna to pay benefits for services based on the MultiPlan contracts.

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The lawsuit also alleges that Cigna’s actions violated laws in New Jersey and Washington.

“Not only does Cigna ignore the MultiPlan Contracts that providers have entered into when processing claims, but it falsely tells patients that their providers have agreed to reimbursement rates below the MultiPlan Contract rate, when providers have not so agreed,” the lawsuit says.

“Cigna uses misrepresentations to patients about their providers as a means to pressure providers to agree to those discounted rates. Cigna does so, at the expense of its insureds and their providers, in order to maximize its own profits through exorbitant and unreasonable ‘savings fees’ (as to self-funded plans) and reduced benefit payments (as to fully insured plans).”

The lawsuit provides three detailed examples of patients and their physicians who say they were victims of Cigna’s improper billing. Each patient exhausted their appeals within Cigna.

Dr. Resneck said that by joining the case as a plaintiff, “the AMA hopes to shed light on Cigna’s misconduct and create remedies so that patients and physicians can look forward to getting what they are promised.”