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12 ¦ APRIL 12, 2021 NEWS

‘Let Them Wither’: Why the Industry Is
Watching Cigna’s Battle Over Lab Billings

By Robert Storace

Lawyers in Hartford, Connecticut, the insurance
capital of the country, are watching as both sides
dig in their heels in a multimillion-dollar legal
battle involving Cigna Health and Life Insurance
Co. and several of its laboratory providers.
Cigna is claiming fraudulent billing. But the labs
say Cigna has made these claims in the past as part
of a pattern of behavior, something the insurer de-
nies.
The case “will be of interest to attorneys, es-
pecially in Connecticut, because there are some
interesting procedural issues at play, some interest-
ing substantive issues and a lot of money at stake,”
said Scott Hare, a partner with Whiteford Taylor &
Preston in Pittsburgh, Pennsylvania, and the lead Cigna sign on the side of a building in Philadelphia.
counsel for the lab providers. “It’s a case to follow— Photo: Alan Budman/Shutterstock.com

to the extent we are successful—because this will The U.S. Court of Appeals for the Second Circuit
be a recovery of payment under state statute. The dismissed most of the insurers’ claims, but three sur-
broader notion of obligations under the scope of vived: equitable claims of unjust enrichment, unjust
ERISA is an interesting topic for folks in the insur- enrichment under ERISA, and declaratory judgment
ance world.” on the ground of laches, or the delay of a case.
ERISA, the Employee Retirement Income Se- Then on April 2, the labs filed a post-remand brief
curity Act, is the federal statute governing worker in further support of their motion to dismiss all
benefit plans. counts.
Three labs first sued Cigna and its corporate af- The brief states that alleging fraudulent billing “is
filiate, Connecticut General Life Insurance Co., a deliberate and repeated strategic maneuver. Near-
claiming the insurers owed about $32 million in ly one week before Cigna filed this suit, [it] filed a
unpaid claims. But the insurance companies coun- nearly identical suit in this court against New Meth-
tersued, accusing the labs of fraudulent billing. od Wellness, Inc.” alleging fraud.
The three plaintiffs are Epic References Labs Inc., In an interview, Hare, who represents the six labs,
Biohealth Laboratories Inc. and PB Laboratories three of which claim they are owed $32 million for
LLC. medical care and lab testing, say attorneys following
Cigna countersued them and three others— insurance law will be paying close attention to this
Epinex Diagnostics Inc., NJ Reference Laboratories ongoing legal saga.
Inc. and Althea Laboratories Inc.—for $17 million. Hare said he’s confident the remaining counts
The labs won a huge victory in the U.S. District Cigna alleges will be dismissed and that his clients
Court for the District of Connecticut, which dis- will receive the money owed them.
missed all of Cigna’s counts. “These labs did this work and over the years,
Cigna then appealed. Cigna paid the labs $37 million. To pay that much

CONNECTICUT
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