CIGNA Can't Avoid Providers' Claims in Database Lawsuit

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By Carmen Castro-Pagan

May 2 — Out-of-network health-care providers have ERISA standing to continue with their lawsuit accusing Connecticut General Life Insurance Co. of using a manipulated database to determine their services fees, the U.S. Court of Appeals for the Third Circuit ruled.

In the May 2 unpublished opinion, Judge Thomas I. Vanaskie reversed in part the district court decision that had seemingly put an end to a decadelong litigation. Vanaskie remanded the case to the district court, holding that the providers had sufficiently pleaded the existence of a valid assignment to support derivative standing under the Employee Retirement Income Security Act.

The proposed class action was originally brought by medical providers, individual subscribers and 14 medical associations, alleging that out-of-network services were underpaid because of flawed “usual, customary and reasonable” (UCR) rate data provided by Ingenix Inc.

Long Litigation History

The district court first held that the providers and associations lacked standing and thus dismissed their claims, but it allowed the subscribers to proceed with some of their claims, including those brought under ERISA (187 PBD, 9/27/11).

The court later denied the subscribers' motion for class certification (76 PBD, 4/21/14).

Finally, the district court granted CIGNA's motion for summary judgment over the subscribers' remaining claims (123 PBD, 6/26/14).

Derivative Standing

On appeal, the providers argued that their assignments of benefits from participants included the right to sue under ERISA to recover those benefits.

CIGNA argued that the assignments were insufficient to confer derivative standing to the providers. CIGNA argued that the providers failed to allege with adequate specificity the existence of valid assignments since they didn't include a complete unequivocal transfer of the patients' rights to benefits.

Citing the recent decision in North Jersey Brain & Spine Center v. Aetna, Inc., 801 F.3d 369 (3rd Cir. 2015), the court agreed with the providers. In rejecting CIGNA's argument, the court noted that “an assignment of the right to payment logically entails the right to sue for non-payment.”

The providers' allegation that they received from CIGNA insureds an assignment of benefits or a claim assignment through which they were paid directly by CIGNA was sufficient to plead the existence of a valid assignment to support derivative standing, the court said.

As to the remaining issues, the court affirmed the district court's denial of class certification. It also affirmed the district court's ruling dismissing claims brought by individual subscribers and medical associations against CIGNA.

The opinion was joined by Judges Marjorie O. Rendell and Thomas M. Hardiman.

Carella Byrne Cecchi Olstein Brody & Agnello, Nagel Rice, Epstein & Quackenbos, Axelrod & Dean, Bonnett Fairbourn Friedman & Balint and Whatley Drake & Kallas represented the subscribers, providers and medical association. Gibbons PC and Kirkland & Ellis represented CIGNA.

To contact the reporter on this story: Carmen Castro-Pagan in Washington at ccastro-pagan@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com