Health insurer Cigna recently filed a lawsuit against Sky Toxicology Lab Management and urine drug toxicology (UDT) laboratories Sky Toxicology, Frontier Toxicology and Hill Country Toxicology that, among other things, accuses them of engaging in fraud and a lucrative patient-referral kickback scheme.
All three labs are located in San Antonio Texas. Sky Tox and Frontier Tox are about a block apart from one another, and Hill Country Tox is about a 10 minute drive away. According to the “About Us” pages on the websites, the three UDT labs share the same executive team: W. Wade White, MD-CEO and Medical Director; Lance Hupfeld-Chief Sales Officer; Bradley West-Chief Operating Officer.
Sky Toxicology Lab Management is a limited partnership organized in Florida in 2013, according to the Form D on file with the Securities and Exchange Commission. Its principal place of business has the same address as Sky Toxicology, and it lists Dr. White, Mr. Hupfeld, Mr. West and a fourth individual named Nick Boatman as its executive officers.
The vast majority of health insurance plans administered by Cigna are called Administrative Services Only (ASO) plans that are funded by private companies through employee contributions, with Cigna providing claims processing and appeal adjudication services. Cigna has fiduciary responsibility for these plans, which are also governed by the Employee Retirement Income Security Act of 1974 (ERISA), a federal law that provides protection for individuals with private health insurance plans through a set of minimum standards.
Cigna allows members to choose whether they want to receive care from health care providers (including laboratories) that are in Cigna’s network or outside of Cigna’s network. If the member chooses an out-of-network provider, the member will incur more financial responsibility through higher co-pays, deductibles and co-insurance than if they had used an in-network provider.
The member can also be balance billed, which is when the out-of-network provider bills the patient for the difference between what they charged for their services and what the insurance company paid.
Cigna claims it is “widely-known” that patients who pay for even a small portion of their health care out-of-pocket will make “more informed choices regarding medical care, and choose care that is medically necessary, and not simply free of charge.”
Since July 2011, Cigna has paid more than $17.5 million to Sky Tox for over 40,000 processed claims, more than $3.4 million to Frontier Tox for over 5,900 claims, and more than $1.8 million to Hill Country Tox for over 3,400 claims. The overwhelming majority of these claims were submitted under ASO plans.