By: Karina Gonzalez
Cigna recently sued a Texas hospital, Humble Surgical for overpayments. Humble Surgical is an out-of-network (OON) provider. Cigna alleged fraudulent billing practices and that the hospital engaged in a scheme to defraud payors by waiving members’ financial responsibility.
While the suit involved many other allegations our article focuses on the arguments Cigna made on failure to collect co-payments, deductibles, and co-insurance and fee-forgiving practices by the hospital. There were several other issues raised that are important to various practices that Cigna has engaged in with out-of-network providers. Cigna has consistently audited South Florida providers alleging failure to collect patient financial responsibility or fee-forgiveness, then informing the provider that it was not entitled to any reimbursement because these practices fell within the exclusionary language of the member’s plan.
The suit brought under federal law, ERISA and also Texas common law seeking reimbursement for all overpayments. Cigna was seeking equitable relief including imposing a lien or constructive trust on fees paid to the hospital.
Humble Surgical counter sued against Cigna for nonpayment of patients’ claims, underpayment of certain claims and delayed payment of all claims in violation of ERISA, including other causes of action. Here’s what happened:
The facts show that from 2010-2014 the hospital’s claim’s “continue to languish in Cigna’s SIU (special investigative unit)” and for the most part remained unpaid. Cigna asserts that the claims were not paid because it either never received the information that it requested or noticed that the member had not fully paid his/her co-payments or co-insurance.
Cigna asserted that when it received notice of additional payments from the patient/member it “re-adjudicated” Humble Surgical claims using what it referred to as a “proportionate share analysis.” In other words, claims were processed proportionately to what the provider collected from the patient.
Cigna interpreted the language in its self-funded plans to mean that if a member owed a deductible, co-pay or co-insurance, and the provider did not collect it then Cigna would either not pay the claim or pay only a portion based on its “proportionate share analysis”.
Cigna has also consistently said that if the provider did not collect the patient’s financial obligation, or waived a portion of the bill, Cigna believes it was excused from making full payment under the terms of the plan.
The Court rejected Cigna’s position. Reviewing the plan language the Court found that a patient/Cigna member would not understand that his/her coverage is conditioned on whether the provider collects upfront the co-pay and co-insurance before Cigna pays. Likewise The Court found that the average patient/Cigna member would not interpret the plan language to mean that Cigna would pay their bill in proportion to the payments that a member made to the provider. Instead the Court found that the average patient/Cigna member would expect Cigna to pay its full share in accordance with the terms of the various plans, irrespective of what a plan patient/Cigna member paid or was capable of paying. Cigna’s interpretation of its own plan language was rejected by the Court
On the fee-forgiving allegations, the Court found that Humble Surgical informed some patients/members that pursuant to its Charge master and prompt pay programs it would not bill them further. Humble did not waive any fees that fell below the negotiated “allowables”. The Court found that to the extent Humble forgave fees based on sums charged that exceed the allowable, that practice was not considered fee-forgiving.
Cigna’s own SIU investigator testified that if a provider “attempts” to collect the co-payment, co-insurance and/or deductible the fact that portion was not collected does not constitute fee-forgiveness.
This is a very strong opinion against Cigna’s practice to absolve itself of its responsibility to pay the benefits owed to providers (as an assignee of the benefit) which denied the patient/Cigna member the benefit of the bargain under their plan. An out-of-network provider does not have plan documents and relies on Cigna to provide accurate information and to pay benefits pursuant to the various plans.
The Court ruled that Cigna did not have the discretion under ERISA to “absolve itself of its responsibility to process and pay Humble Surgical claims because it assumed that it could demand upfront payments of co-pays” and then pay some claims based on a proportionate share analysis. Cigna’s conduct lacked good faith and prejudiced the provider under these circumstances.
Cigna recovered nothing and was required to pay approximately $16,000,000 in damages, penalties, attorney’s fees in addition pre-judgment and post-judgment interest and court costs.
This ruling is very helpful in giving guidance to some of the problems South Florida providers have been having with Cigna’s denial of payments based on collection of patient responsibility and other practices for nonpayment based on a host of theories that seem to lack good faith and have definitely hurt providers in this area.