By: Cassandra Frias and Ada Dolph
Seyfarth Synopsis: After focusing most of its attention on retirement benefit plans, a recent complaint filed in the District of Connecticut shows that the plaintiffs’ bar is turning to health and welfare plans as targets for their new theories of breach of fiduciary duty under ERISA.
Plaintiff Aubrey Srednicki is enrolled in a group health plan provided by her employer and administered by Cigna Health and Life Insurance Company. She filed suit against Cigna Health and Life Insurance Company in the District of Connecticut on February 24, 2023. In her Complaint, Srednicki alleges that a Cigna-affiliated medical provider overcharged her for services, allowing Cigna to take credit for a larger discount than was given, and to balance bill her significantly more than her copay would have been on the actual price of the services. Notably, Srednicki seeks to represent a class of individuals much broader than those in her own benefit plan. She seeks to certify a class of all individuals who were or are enrolled in an employee benefit plan insured or administered by Cigna, who had lab work done at one of two Cigna-affiliated laboratories, and whose cost share was more than the amount paid actually paid by Cigna for the lab work.
Srednicki offered her own lab work as an example: she alleged that her doctor called LabCorp to inquire about the cost for a patient without insurance and was told that the lab work cost $449. Srednicki alleges, however, that the billed amount on her explanation of benefits (EOB) was $17,362.66. Of this amount, $14,572.66 was the purported discount arranged by Cigna. Of the difference, Cigna allegedly paid $471.02 and billed Srednicki for the $2,315.98. Having already fully paid LabCorp, Srednicki alleges that the $2,315.98 was a windfall for Cigna.
Srednicki’s brings claims under both ERISA 502(a)(1)(B) and 502(a)(3). She seeks clarification of her benefit rights, a finding from the court that the putative class members were overcharged, an accounting of the overcharges, and the return of the amounts the members were overcharged. Srednicki alleges that Cigna’s overcharging constituted a prohibited transaction and benefited a party in interest. She also alleges that Cigna failed to monitor appointed fiduciaries, failed to apply plan terms to the calculation of benefits, failed to follow plan procedure, and violated the duty of prudence.
In short, with increased focus on the fees and billing arrangements in the health and welfare benefit plan sphere, whether plan administrator or claims administrator, now is the time to examine your plan and shore up its compliance with ERISA. Please reach out either to the authors of this Blog Post or to your Seyfarth Employee Benefits attorney if you need additional information.