Cigna Must Defend Tox Lab’s $13M Unpaid Benefits Lawsuit

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By Carmen Castro-Pagan

Cigna Healthcare of Texas Inc. can’t escape a lawsuit by a Texas-based toxicology lab seeking to recover more than $13 million in allegedly unpaid services ( Rapid Tox Screen LLC v. Cigna Healthcare of Tex. Inc. , 2017 BL 298478, N.D. Tex., No. 3:15-cv-03632, 8/24/17 ).

Rapid Tox Screen LLC can bring claims of fiduciary breach and to recover benefits under the Employee Retirement Income Security Act, Judge Jane J. Boyle of the U.S. District Court for the Northern District of Texas held Aug. 24. Rapid Tox sufficiently alleged its ERISA claims challenging Cigna’s claims processing method, Boyle said in denying the insurer’s motion to dismiss. She also allowed Rapid Tox to proceed with its Texas law claims, including for alleged breach of contract, negligent misrepresentation, and theft of services.

Boyle’s decision is the latest defeat for Cigna in a series of cases brought by out-of-network providers in Texas challenging the insurer’s decision to reduce or withhold payment of benefits when it determines that providers engaged in fee-forgiveness.

In June 2016, a federal judge ordered Cigna to pay $13.6 million to out-of-network provider Humble Surgical Hospital after it concluded that the insurer’s claims processing method violated federal law. Months later, the judged allowed North Cypress Medical Center to proceed with its $50 million lawsuit against Cigna, holding that the insurer violated ERISA by denying full benefit payments.

These rulings against Cigna didn’t impede Aetna Life Insurance Co. from winning its lawsuit against Humble Surgical for allegedly engaging in a “dishonest” billing scheme. At the end of last year, another federal judge in Texas held that Aetna could collect up to $41 million from the Texas-based hospital.

The parties’ dispute stems from Cigna’s decision to reduce the amount it reimbursed Rapid Tox after allegedly accusing the laboratory of engaging in fee-forgiveness—a practice in which providers waive in full or in part the amount patients owe them once providers get paid by insurers. In 2015, Cigna stopped paying Rapid Tox claims, alleging it overpaid the laboratory by more than $5 million.

In its request to dismiss, Cigna argued that Rapid Tox failed to allege that it was assigned the right to bring non-benefit claims, such as breach of fiduciary duty. In her ruling, Boyle didn’t reject the argument entirely. Instead, she held that because the assignments on which Rapid Tox relied weren’t attached to the lawsuit, she couldn’t determine whether any of the assignments include specific language related to non-benefits ERISA claims.

Weaver Johnston & Nelson PLLC represents Rapid Tox. McDermott Will & Emery LLP represents 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

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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