CHICAGO — A federal judge has granted a win to multinational insurer Cigna, cutting out state law fraud claims from a lawsuit brought by a surgical center asserting the insurer was wrong to deny claims for reimbursement from certain Cigna-insured patients, for whom the surgical center had forgiven much of the bill because the surgical center was outside of those patients' preferred providers network.

On June 13, U.S. District Judge Harry D. Leinenweber granted a partial summary judgment requested by the Connecticut General Life Insurance Co., known internationally as Cigna, concerning its denial of reimbursement of healthcare claims made by Advanced Ambulatory Surgical Center Inc. (AASC), of Chicago. 

The lawsuit stemmed from Cigna’s refusal to reimburse AASC, an out-of-network healthcare provider, for medical procedures performed for patients allegedly benefitting from “fee forgiveness,” a practice in which patients are charged nothing and the healthcare provider accepts the percentage paid by the insurance provider as payment in full. 

Fee forgiveness typically incentivizes patients to seek out-of-network providers because out-of-pocket costs are lower than they would be with a network provider that is forced to require full payment of copays and deductibles. In order to curb competition against its network providers, Cigna issued policy changes, threatening to deny reimbursement to out-of-network healthcare providers that were suspected of fee forgiveness.

Cigna investigated AASC in October 2010 and sent a letter inquiring about that organization’s payment collection methods. After AASC failed to respond, Cigna sent a letter in December 2010 stating that it would deny all questionable policy claims until AASC could prove that Cigna plan members receiving treatment there were being “required to pay the full applicable out-of-network co-insurance and/or deductible.” 

AASC denies practicing fee forgiveness and claims that in certain cases when patients were unable to make full payment, AASC sometimes wrote off patient cost shares as an act of charity.

When Cigna refused to reimburse AASC for claims it deemed violated its fee forgiveness protocol, AASC launched a lawsuit in September 2013. 

Afterward, AASC amended its request for reimbursement by adding charges of promissory estoppel (failure to deliver on a promise of payment), fraud and “vexatious and unreasonable delay in settling insurance claims.” Cigna responded by filing a motion for a partial summary judgment. 

On June 13, the federal judge sided with Cigna on the state law charges.

While he noted two AASC employees may have verified patient insurance coverage with a Cigna agent over the phone prior to administering treatment to patients with Cigna healthcare plans, Leinenweber said verification of insurance plan benefits “is not a concomitant promise of payment.” 

Leinenweber further ruled that Cigna was not in violation of Illinois insurance statutes, for it was acting solely as a third-party administrator, whereas the state of Illinois and the Metropolitan Pier and Exposition Authority were identified as the acting insurers for the patients receiving treatment.

Cigna was represented in the action by attorneys with the firm of Hinshaw & Culbertson, of Chicago.

AASC was represented by attorney Thomas J. Pliura, of LeRoy, Ill. 

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Cook County Circuit Court
50 W Washington St
Chicago, IL - 60602

Hinshaw & Culbertson LLP
222 N LaSalle St
Chicago, IL - 60601

State of Illinois
301 S 2nd Street
Springfield, IL - 62707

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