United States District Court Judge Nitza I. Quiñones Alejandro, who sits in the Eastern District of Pennsylvania, has approved an $11.75 million settlement of a class-action lawsuit filed by chiropractors against Cigna Insurance and American Specialty Health Networks (ASH), which was contracted by Cigna to administer chiropractic claims for its subscribers.
- Issuing false and misleading reports relating to chiropractic claims including Explanations of Benefits ("EOB") informing subscribers of how their chiropractic claims have been processed. These falsified reports misrepresented the amount insureds owed for health care services, leading to greater out-of-pocket costs than were properly charged under their plans, while also interfering with the doctor-patient relationship because they mischaracterized the administrative fee owed to ASH as a medical cost.
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Reporting inaccurate Medical Loss Ratio ("MLR") due to the inaccurate EOBs above which allowed them to misrepresent the ASH administrative fee as a medical expense, thereby minimizing the potential for paying rebates to insureds required by the federal Patient Protection and Affordable Care Act ("PPACA"). - Adopting utilization review and pre-certification requirements which imposed restrictions on coverage that were not included in the subscriber's insurance plans.
- Making utilization management determinations on chiropractic care by non-New Jersey licensed chiropractors in direct violation of N.J.S.A. §45:9-14.5 (2010).
The class-action lawsuit arose, in part, from a Market Conduct Study of ASH conducted by the New Jersey Department of Banking and Insurance in 2012. As a result of the study, NJDOBI inspectors found that "the Company's practices did not accord fully with various provisions of New Jersey insurance statutes or regulations ... where the frequency of error was such as to constitute an improper general business practice" (NJDOBI Market Conduct Study Consent Order E12-101). The NJDOBI inspectors found error ratios of 56 percent on electronic claims and 55 percent of paper claim for a total error ratio of 56 percent for random files. The examiners found significant errors in the following claim adjudication areas:
- Failure to adjudicate claims in accordance with the provider contract and fee schedule
- Failure to adjudicate CPT 98941 (3-4 regional spinal adjustment) and improperly denying the benefits for these chiropractic claims
- Failure to adjudicate CPT 97140 (manual therapy) and under-paying the benefit
- Unfair denials due to failure to comply with Treatment Form Waiver Program
- Systemic claim settlement delays
- Improper copayment assessment
- Failure to provide reasonable Explanation of Benefits and utilization of misleading statements on Provider Remittance Advices (improper General Business Practice)
The NJDOBI noted that American Specialty Health misrepresented pertinent facts or insurance policy provisions on its EOBs by including its administrative compensation in the amount billed section of the form. The NJDOBI examiners concluded: "Accordingly, the EOB is untrue and misrepresents pertinent facts, contrary to N.J.S.A. §17B:30-13.1a."
While Cigna and ASH admitted no wrongdoing, the settlement agreement requires Cigna/ASH to pay $11.75 million as the total settlement amount, which includes $1 million toward administrative fees and $10.75 million toward benefit claims. It also requires that "ASH will make reasonable efforts to enact certain business reforms related to the conduct challenged by Plaintiffs."
"This was a huge victory for patients across the United States who had to deal with ASH reducing their health care that was so vitally needed," said Dr. Steven Clarke, one of the lead plaintiffs in the case. He pointed out that other similar lawsuits have been filed against ASH for similar reasons.
As the settlement has been approved by the Court, it is in the process of being funded and a claims process established by a claims administrator for members of the class to submit a notice of claim to participate in the settlement. Information on this process can be obtained at http://highstreetchirosettlement.com/.
Editor's Note: This is the larger of two class-action settlements by Cigna and American Specialty Health this year; in May, they agreed to pay $8.25 million after being accused of improperly charging administrative fees. Several other claims against the two entities are ongoing. Despite American Specialty Health's legal troubles and allegations of impropriety, Horizon Blue Cross Blue Shield of New Jersey recently announced plans to partner with ASH beginning in 2020. Will litigative history repeat itself? Stay tuned.
Jeff Randolph serves as general counsel for the Association of New Jersey Chiropractors.