Judge Declines Consolidation of Repricing Suits Against Cigna

On Tuesday, the court issued an opinion in a class action brought by Pacific Recovery Solutions against Cigna Behavioral Health Inc. The opinion, issued in the Northern District of California, dealt with a motion to consolidate the case Summit Estate Inc. v. Cigna Health and Life Insurance with the larger Pacific Recovery Solutions case for ease of resolution. Both of the cases involve plaintiff patients and medical providers whose mental health bills had been repriced using a third-party entity, resulting in a very small provider payment and a very large patient responsibility.

When a medical provider does not have a negotiated contract giving insurance companies a discount from their billed rate, frequently an alternative pricing schema will be sought by the insurance company. In both of the cases before the court, Cigna sought a repricing discount from a third-party repricer, Viant. Viant was not contracted with any of the plaintiff medical doctors and used a proprietary system to “discount” the bills without the consent of the medical providers or the patients, who remained responsible for the full billed rate in the absence of a contract. This resulted in very large bills remaining underpaid.

The plaintiffs sued for: (1) unfair and unlawful business acts and practices in violation of California Business & Professions Code § 17200 against Cigna and Viant; (2) intentional misrepresentation and fraudulent inducement against Cigna and Viant; (3) negligent misrepresentation against Cigna and Viant; (4) civil conspiracy against Cigna and Viant: (5) breach of oral and/or implied contract against Cigna; (6) promissory estoppel against Cigna and Viant; (7) violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) against Cigna and Viant; and (8) violations of section 1 of the Sherman Act against Cigna and Viant.

The court, however, denied the motion for consolidation, noting several points where the class action was different enough from the individual case to warrant separate proceedings. Regarding the parties, the court noted while both suits had Cigna in common, all of the plaintiffs were distinct and the individual suit, Summit, did not include Viant as a defendant. The court also noted that the patients received different factual treatments, where the patients in the class action received Residential inpatient treatment, while the Summit plaintiffs were all receiving intensive outpatient care. The two suits had a potentially overlapping, but not exactly matching date span, which would have complicated the consolidation. Also, the cases were at different points in the resolution process, with the Summit case having already been subject to settlement discussions and the class action still at the early motion to dismiss stage. While acknowledging that there was a possibility for conflicting judgments, the court indicated that the degree of disparity noted above merited separate cases.

The plaintiffs are represented by Napoli Shkolnik and DL Law Group. Cigna is represented by McDermott Will & Emery. Viant is represented by Phelps Dunbar and Sheppard, Mullin, Richter & Hampton.