Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
Cigna Corp., American Specialty Health Inc., and its subsidiaries are accused of colluding to charge extra fees to employer-sponsored health insurance plan participants who received physical and occupational therapy services.
Cigna and its third-party claims processor ASH allegedly violated federal benefits law by collecting charges from members and plans under the guise that they were medical expenses when in fact they were charges to pay for ASH’s services, according to a lawsuit filed May 23 in the U.S. District Court for the Southern District of California.
The lawsuit is the second in the past two months to target the health companies and their subsidiaries over similar allegations. Last month, Cigna and ASH were accused of colluding to charge extra fees to insureds who sought chiropractic services. In 2015, the U.S. Court of Appeals for the Third Circuit revived a lawsuit against Cigna and ASH involving chiropractic services. Those two cases are pending in federal court in Pennsylvania.
The latest lawsuit, filed by two participants in health plans sponsored by Barry-Wehmiller and Staples Inc., seeks class status for other similarly situated insureds.
The participants allege that Cigna and ASH breached their Employee Retirement Income Security Act duties by misrepresenting ASH’s charges as covered medical expenses and failing to disclose ASH’s charges to members and plans. The explanation of benefits issued by Cigna and ASH allegedly concealed material information regarding the nature and purpose of the charges, the lawsuit said.
Cigna covers about 15 million Americans with its various medical plans. In 2016, its revenue rose 5 percent to $39.7 billion as premiums, fees, and mail-order pharmacy revenues all increased, according to Bloomberg data. ASH administers chiropractic and other benefits for more than 20 million people in the country and maintains a network of more than 21,000 chiropractors, according to the lawsuit.
Cigna declined to comment, citing a company policy not to comment on pending litigation. ASH didn’t immediately respond to Bloomberg Law’s request for comments.
The Maul Firm P.C., Chimicles & Tikellis LLP, and Zuckerman Spaeder LLP represent the insureds.
The case is Zhu v. Cigna Corp., S.D. Cal., No. 3:18-cv-01029-WQH-JMA, complaint filed 5/23/18.
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