Cigna ordered to pay $13M to physician-owned hospital

A Texas federal judge has ordered Cigna to pay more than $13 million to Humble (Texas) Surgical Hospital, concluding that the Bloomfield, Conn.-based insurer breached the terms of its policies by refusing to cover out-of-network services provided by the physician-owned facility.

Humble Surgical Hospital opened in August 2010. Soon after, the hospital began submitting claims for reimbursement to Cigna. For a few months, Cigna paid Humble's claims based on negotiated agreements between the hospital and Multiplan or Viant, two third-party repricing entities that determined "allowable" amounts.

However, in October 2010, Cigna opted to review Humble's claims in-house and began submitting claims to its special investigation unit for investigation, processing and payment. Cigna said it made the change after discovering Humble was submitting claims for exceedingly large amounts.

In its suit, Humble alleged from December 2010 to April 2014, its claims continued to be sent to Cigna's investigation unit and, for the most part, remained unpaid. If the hospital submitted a claim to Cigna and the patient had not fully paid their co-pay or co-insurance, the insurer would deny the claim or only pay a portion of it.

According to the judge, Cigna's claim denials were based on the insurer's flawed interpretation of exclusionary language in self-funded plans it administered.

"Cigna's interpretation of 'exclusionary' language as rejecting covered services, was improper and violative of the plans' terms," the judge concluded.

The judge ordered Cigna to pay $11.4 million in damages and $2.3 million in penalties under the Employee Retirement Income Security Act. The insurer will also pay the hospital's attorney fees, which will be determined at a later date.

Humble filed suit against Cigna after the insurer sued the hospital alleging it had inflated its bills. The court dismissed all of Cigna's claims.

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