Health Insurance Company Cigna Files Phantom Billing Suit

Plaintiffs Connecticut General Life Insurance Company and Cigna Health and Life Insurance Company (collectively, Cigna) filed suit last Friday in the District of Connecticut against a host of companies who allegedly engaged in a “fraudulent billing scheme designed to enrich themselves at the expense of Cigna and the health plans that Cigna insures and administers.”

The defendants (Medmarket Consulting, Inc., Finger Lakes Brace Company, National Healthcare Partners, LLC, USA Medical, LLC, Precision Medical Products, Inc., and Christopher Parks) have experienced what the plaintiffs explain as an unjust enrichment of at least $18.7 million.

The defendants allegedly submitted multiple fraudulent claims to the plaintiff over the course of several years for durable medical equipment such as intermittent pneumatic compression devices (PCDs). This scheme has allegedly resulted in the defendants receiving multiple payments which they were not entitled to receive. This illegal practice is known as “phantom billing.”

The durable medical equipment and PCDs filed for claims were “not ordered by patients, not delivered to patients, and not even prescribed by their physicians.” The equipment was usually not medically necessary, or was even used for experimental, investigational, or unproven purposes that were not included under Cigna’s Medical Coverage Policy, the complaint said. The defendants allegedly made misrepresentations that the claims they filed with Cigna were “submitted in compliance with the terms of the relevant Cigna Plans and related coverage policies.”

The plaintiffs also allege that the defendants “furthered their scheme” when they tried to conceal the misconduct. When filing their claims, they would provide false diagnosis codes so that it appeared the charges were covered under the medical coverage policy of Cigna’s insurance. On some occasions, they would waive patient’s financial obligations in an attempt to prevent them from raising any concerns they had regarding insurance to Cigna.

Collectively, Cigna claimed that these actions have enriched the defendants by at least $18.7 million. They are citing counts of fraud, aiding and abetting liability, negligent misrepresentation, unjust enrichment, conversion, civil statutory theft, and ERISA violations.

The plaintiffs are represented by Alston & Bird.