Cigna is facing a lawsuit claiming it made a profit by underpaying out-of-network ground ambulances, according to a class-action complaint filed Oct. 12 in a California federal court.
The lawsuit centers on self-funded employer health plans that Cigna administers under administrative services only agreements. The plaintiff, who was covered by one of these plans, alleged Cigna’s ASO agreements allow the insurer to earn up to 29% of ground ambulance charges that go unpaid by employer plans.
“By charging employers percentage-based, ‘cost containment fees’ for minimizing plan payments to ground ambulance providers, Cigna has unnecessarily and unlawfully placed its own skin in the game of pricing ground ambulance coverage for corporate employers throughout the United States,” the complaint said. “Moreover, Cigna has rigged that game for its own benefit, by unreasonably underpaying ground ambulance providers to the detriments of covered employees.”
The No Surprises Act established protections for patients using air ambulance providers but left out ground ambulances. While some states have implemented their own regulations to prevent surprise billing from ground ambulance providers, these laws and regulations are generally preempted by the Employee Retirement Income Security Act for self-funded employer plans.
In the plaintiff’s case, Cigna allegedly had the plan pay $386.77 of the ambulance provider’s $3,644.91 fee. The complaint alleged Cigna charged the employer 29% based on those plan savings, but the plaintiff still encountered a surprise bill of $3,258.14, despite being told he would not owe anything.
The lawsuit presents breach of fiduciary duty and prohibited transactions claims under ERISA. The complaint argues Cigna did not act solely in the interest of plan participants. The percentage-based fees also could be swapped for flat fees or hourly rates for negotiations, so Cigna does not have a stake in the outcome.
The complaint estimates the class to be “at least thousands” of people who faced similar circumstances could be in the class. The plaintiff is seeking repayment of class members’ balance bills and an order barring Cigna from charging self-funded plan sponsors fees tied to reductions in ground ambulance charges, among other forms of relief.
Becker’s has reached out to Cigna for comment and will update this story if more information becomes available.
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