Health Diagnostic Laboratory (HDL) has filed a motion to dismiss the $84 million fee-forgiving fraud suit filed by Cigna, arguing the insurer’s use of the amended Employment Retirement Security Act of 1974 (ERISA) is fatally flawed.
…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.
HDL’s memo of law in support of its motion to dismiss
The bulk of HDL’s argument centers around Cigna’s use of ERISA as the basis for its claims and offers six reasons why the suit should be dismissed:
- Cigna lacks standing as a fiduciary under ERISA
- Cigna failed to comply with ERISA’s administrative process for adverse benefit determinations
- Cigna failed to identify any ERISA provisions that were violated and resulted in harm
- Cigna failed to allege damages that can be compensated under ERISA
- Cigna’s state law claims are preempted by ERISA
- Cigna failed to “allege fraud with particularity”
What follows is a summary of HDL’s arguments in its Memorandum of Law in Support of Motion to Dismiss.
Cigna lacks standing under ERISA
Under ERISA, only “participants, beneficiaries, and fiduciaries” may seek relief. ERISA further states a fiduciary may only recover funds for the plan(s) it administers, and not for the fiduciary itself.