Three Florida-based medical laboratories suing Cigna Health for $32 million are asking a judge to force the health insurer to hand over patients’ policies, claims and invoices during the discovery process in U.S. District Court in New Haven.
The Florida plaintiffs—BioHealth Laboratories and PB Laboratories, based in West Palm Beach, and Epic Reference Labs in Riviera Beach—say Cigna failed to pay them for authorized blood and urine tests conducted between 2012 and 2017.
Cigna, headquartered in Bloomfield, Connecticut, purportedly paid $37 million to the labs, but denied $32 million in claims.
Cigna countersued, alleging that the three labs—along with a fourth, Epinex Diagnostics Laboratories in Tustin, California—engaged in a fraudulent billing scheme that resulted in millions of dollars of overpayments.
Both cases were filed in Superior Court in Connecticut but have been moved to federal court.
The parties have jointly requested that the courts consolidate the cases “in the interest of judicial economy.”
Discovery is underway in both cases, which are assigned to U.S. District Judge Janet C. Hall. A ruling on the motion to consolidate is pending.
On Jan. 14, the labs filed a motion to compel documents from Cigna related to the alleged nonpayment of services, including “every health insurance plan or policy that you issued or administered,” along with invoices and claims sent to patients.
Cigna has refused to provide the documents, saying the requests are too broad, and that certain information is protected by attorney-client privilege or work-product doctrine.
“Cigna objects to this interrogatory as not proportionate to the needs of the case to the extent it requests that Cigna describe every conceivable reason for non-payment for more than 125,000 individual payment claims,” said Cigna’s response to the plaintiffs’ request for production.
In an amended complaint filed Dec. 13, 2021, Cigna said the labs’ billing scheme was designed to enrich themselves by knowingly submitting fraudulent claims for reimbursement.
Through a practice called “fee forgiving,” the labs waived patients’ cost-share obligations for out-of-network services while charging Cigna “exorbitant rates,” the filing alleges.
The practice of fee forgiving “destroys incentives to seek in-network providers and, ultimately, drives up medical costs for plans, which the plans must then pass on to members in the form of higher premiums and/or reduced benefits,” according to the suit.
The labs also submitted claims for reimbursement for medically unnecessary, and exceedingly expensive, urine drug tests, Cigna claims.
Cigna’s plans only cover urine drug testing services that are medically necessary for the diagnosis or treatment of a patient based on that patient’s medical history and current conditions.
The labs also repeatedly billed Cigna for separate parts of urine drug testing, which are required to be bundled into a single code, the suit says.
Cigna’s anti-fraud Special Investigation Unit flagged claims from the four labs, and the insurer started denying payment to them.
The suit claims unjust enrichment, a violation of the Employee Retirement Income Security Act of 1974, which requires plan assets to be held in trust, and held for the exclusive purpose of providing benefits to participants.
Cigna also seeks a declaration that the labs must return roughly $18 million.
Meanwhile, the labs deny any alleged fraudulent billing. They say they did not engage in fee forgiving, but outsourced their collections to third-party medical billers.
Also, the labs say they did not make determinations about whether their services were medically necessary because they were fulfilling orders from third-party medical professionals.
The labs seek $32,074,089 in payment for covered services, plus 12% interest. They say their repeated demands for payment were ignored by Cigna.
The labs are out-of-network providers for Cigna, meaning they do not have an agreement with the insurance company to accept discounted payments, the labs’ complaint says.
The labs are represented by attorneys from Whiteford Taylor & Preston in Pittsburgh, Pennsylvania; Domnick Cunningham & Whalen in Palm Beach Gardens, Florida; and John J. Radshaw III in New Haven.
Cigna is represented by attorneys from Alston & Bird in Washington, D.C., and Raleigh, North Carolina.