Cigna Faces Allegations of Automatic Claim Denials, Prompting Regulatory Scrutiny and Lawsuit

Cigna, a top insurance company with over 18 million covered lives, is currently under scrutiny due to allegations that it employs an automatic system to deny claims without proper review. These claims have raised significant concerns and triggered regulatory action.
In response to the allegations, on September 12, 2023 a shareholder of Cigna stock has submitted a formal demand asserting their statutory right, as per Section 220, to access and obtain copies of specific books and records belonging to Cigna. The plaintiff intends to investigate potential instances of mismanagement, breaches of fiduciary duty, and other alleged wrongdoing by Cigna’s directors and officers in relation to specific matters. The plaintiff seeks access to these records to determine whether Cigna’s directors, collectively known as the “Board,” maintain independence and objectivity in their roles and whether they have acted in good faith. If deemed appropriate based on the information gathered from the requested records, the plaintiff may initiate and pursue legal action on behalf of Cigna and its shareholders against officers, directors, and/or affiliates associated with Cigna. In essence, the plaintiff’s demand aims to facilitate a thorough investigation into Cigna’s internal affairs, with the possibility of legal action if irregularities or breaches of fiduciary duty are uncovered during this process.
The controversy surrounding Cigna began with a revealing article published by ProPublica on March 25, 2023, titled “How Cigna Saves Millions by Having Its Doctors Reject Claims Without Reading Them.” The investigative piece, based on internal documents and interviews with former Cigna doctors and executives, exposed a systematic practice where Cigna’s review system automatically denies claims in bulk. These claims are rejected without any in-depth review of patient files, primarily by categorizing certain tests and procedures as “not medically necessary.”
The heart of this practice lies in a Cigna algorithm that identifies discrepancies between diagnoses and what the company considers acceptable tests and procedures for specific ailments. Denials are subsequently issued by medical doctors without any review of the patient’s actual medical records.
Cigna’s automatic system reportedly enables a single doctor to deny thousands of claims each month with a simple click. The ProPublica article disclosed that, over just two months, Cigna doctors rejected over 300,000 payment requests using this method, spending an average of a mere 1.2 seconds on each case. The company seems to favor this approach for its cost-effectiveness, as it anticipates that many patients will opt to pay these bills rather than navigate the complexities of appealing a rejection. In one corporate document cited, Cigna estimated that only 5% of individuals would appeal a denial stemming from this so-called “PXDX review.”
This practice has raised significant regulatory concerns, as it appears to operate as a “rubber-stamping” process, relying heavily on computer software without any substantial additional review. State insurance regulations may not align with such a system. Many states require physician review prior to insurance claim denials.
In response to the allegations, the U.S. House of Representatives Committee on Energy and Commerce has requested extensive documents and information related to Cigna’s procedure-to-diagnosis (PXDX) review process. The committee’s inquiry emphasizes the potential consequences, highlighting that 80% of Medicare Advantage coverage denials were eventually overturned. This suggests that Cigna’s PXDX review process may lead to patients having to pay out-of-pocket for medical care that should be covered under their insurance policies.
Moreover, state insurance commissioners and the U.S. Department of Labor have joined the scrutiny, indicating a deeper examination of Cigna’s use of algorithms to deny claims. These investigations may lead to substantial consequences for Cigna, both legally and in terms of its reputation within the healthcare industry.
As the allegations surrounding Cigna’s automatic claim denials continue to unfold, the healthcare community and regulators are closely monitoring the situation, underscoring the importance of transparency, ethics, and fairness in healthcare practices.