Cigna Insurance Plan Participants Urge Court to Certify Class on Allegedly Underpaid Claims

Insurance plan participants urged a California federal court to certify a class of 8,000 members in their lawsuit against Cigna, claiming that class certification is the only efficient and cost-effective remedy. The plan participants claim that Cigna colluded with Multiplan, its third-party billing contractor, and Multiplan’s subsidiary, Viant, to underpay out-of-network claims for substance use disorder treatments. The case is RJ v. Cigna Behavioral Health, Inc. et al., case number 5:20-cv-02255, U.S. District Court for the Northern District of California.

In their lawsuit, the plan participants claim that Cigna and its billing companies violated the Employee Retirement Income Security Act (ERISA) and the Racketeer Influenced and Corrupt Organizations Act (RICO). They allege that their benefits plans required Cigna to reimburse their out-of-network claims for mental health and substance abuse disorder treatments at the usual, customary, and reasonable (UCR) rate. The UCR rate is a composite rate based on similar providers in the same geographic area.

However, Multiplan priced the claims using a Viant-furnished methodology, which calculated reimbursements at a rate that was much lower than the UCR rate. As a result, plan participants were left with much higher out-of-pocket costs for these treatments.

Cigna and Multiplan argued against class certification. The companies claim that the plan participants’ proposed class subgroups, which are based on plan types and how providers handled claims, defeat the purpose of certification. They also claim that the Viant reimbursement payments were simply “offers” to start negotiations with providers.

However, plan participants disagree, arguing that the subgroups do not substantially affect the crux of the lawsuit. The major issue in the lawsuit concerns the methodology and data that the companies used to reimburse plan participants for the costs of intensive outpatient care, which was an issue common to all plans. Furthermore, they pointed out, a payment from an insurer to a provider is not normally considered to be an offer designed to initiate negotiations between the two parties, rather than a payment for services rendered.

The court previously dismissed the plan participants’ RICO claims based on money laundering in September 2022, but most of their claims have survived the companies’ motion to dismiss.

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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