Readers will recall HDL is one of the laboratories being investigated by the Office of the Inspector General (OIG) for the Department of Health and Human Services for possibly paying kickbacks to physicians in exchange for referrals. Not soon after that fact came to light, the HDL CEO, Tonya Mallory, resigned.
Cigna states one of its responsibilities is to control health care costs for its benefit plans. It accomplishes this in part by offering incentives to its members to use providers that are in Cigna’s network, who generally charge lower rates than out-of-network providers.
If a member chooses to utilize an out-of-network provider, Cigna requires that member to pay a higher portion of the costs than it would if an in-network provider were used.
HDL, which is not in Cigna’s network, allegedly:
…lures patients from health plans that are administered or insured by Cigna by misrepresenting those patients’ responsibilities under the plans, by promising not to collect any co-payment, co-insurance or deductible obligation, and by further promising not to seek reimbursement for any other portion of its bill that the plan does not cover. HDL then misleadingly bills the plans themselves at exorbitant and unjustified “phantom” rates—rates that misrepresent what HDL actually intended to collect.
Cigna explains that because no member is paying anything for HDL’s services, its members have “no incentive to moderate their demand for HDL’s services or to consider the higher costs of any particular out-of-network service” and this leads to higher costs for the entire plan.
Not only that, but Cigna states fee-forgiveness undermines the insurance industry as a whole, as members will preferentially use out-of-network providers, for whose services they are charged nothing, rather than in-network providers, whose services require the member to pay something. This would lead fewer providers to join insurance networks, which would make health care more expensive overall.
Cigna also accuses HDL of encouraging physicians to order “a litany of medical tests, regardless of whether the provider believes such tests are needed to diagnose or treat the patient”, and also of paying kickbacks to physicians in exchange for referrals (the OIG investigation).
The complaint states HDL did not disclose its fee forgiveness program to Cigna, and that it only became aware of the existence of the program when it came across patient flyers and brochures that explain the program. Cigna then began investigating HDL by sending questionnaires to Cigna members who utilized HDL.
The 27 responses it received confirmed Cigna members were not paying anything for HDL’s services. In addition, Cigna claims the members relayed false information provided to them by their physicians and HDL about HDL’s billing practices and Cigna’s policy.
When Cigna confronted HDL about its billing practices, then-CEO Tonya Mallory assured Cigna that HDL will not engage in fee forgiveness as “a general practice” and that all claims forms submitted to Cigna will reflect “the actual charge for the services(s) provided.”
Causes of Action
- Claim for Overpayments Under ERISA
- Unjust Enrichment
- Negligent Misrepresentation
- Tortious Interference with Contract
- Claim for Unfair and Deceptive Business Practices Under Connecticut’s Unfair Trade Practices Act and Unfair Insurance Practices Act
- Declaratory Relief
Cigna is asking for a jury trial for all non-ERISA claims.
Prayer for Relief
- A declaration that the products and services provided by HDL do not constitute covered services under the employee health and welfare benefit plans administered or insured by Cigna and that HDL is not entitled to receive any payments on the claims for reimbursement that it has submitted or may submit in the future as part of the fee-forgiving practices
- Return of any all monies paid to HDL on claims for reimbursement submitted by HDL
- Monetary, exemplary and punitive damages
- Pre- and post-judgement interest
- Court costs and attorney fees
The full complaint is here.