Cigna health insurance sued over use of software to deny claims

Health insurance - Sue - Law

The insurer was sued in California for alleged unlawful claims reviewing software use.

Cigna is now facing a lawsuit in California over allegedly unlawfully reviewing health insurance claims using software that does it automatically instead of having human employees complete the work.

When a claim is submitted to an insurer, certain steps must be taken to determine if it will be accepted or denied.

The healthcare system in the United States involves certain steps when it comes to determining payment through health insurance coverage. First, the patient heads to a medical practitioner such as a doctor. There, care is provided, such as a diagnosis and possibly a treatment. From there, either the healthcare provider or the patient submits a bill for those services to the patient’s insurer. If the billing doesn’t have pre-approval, the insurer must determine which parts of the claim will be paid, or if it will be refused, so that either the medical provider or the patient are left with the cost.

Health insurance policy claim form

The regulations in California say that “Every insurer shall conduct and diligently pursue a thorough, fair and objective investigation and shall not persist in seeking information not reasonably required for or material to the resolution of a claim dispute.”

The lawsuit alleges that Cigna’s health insurance claim review process did not meet that level.

The suit was filed in an eastern California federal court on behalf of plaintiffs Ayesha Smiley and Suzanne Kisting-Leung. It argues that the insurer’s claims reviews were not “thorough”, “fair”, or “objective” as computer software was used to make the determination, instead of having a human conduct an investigation.

The filing says that the PXDX system used by Cigna “employs an algorithm to identify discrepancies between diagnoses and what the Cigna defendants consider acceptable tests and procedures for those ailments and automatically deny claims on those bases.” It then added that the insurer “used the PXDX system to review, process, and deny insured claims without the medical director’s review.”

Essentially, the lawsuit was filed not because Cigna used software to approve or deny health insurance claims, but because the insurer relied too heavily on it without having another step involving reviews by humans before a claim is denied.

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