Judge advances case over Cigna use of algorithms to deny health claims

(CN) — Cigna must face a putative class action over claims it relied on an automated algorithm to reject health insurance claims without having its doctors even look at the policyholders’ files.

Ruling in Sacramento on Monday, U.S. District Judge Dale Drozd denied in part Cigna’s bid to dismiss the claims by six named plaintiffs who seek to represent other beneficiaries of health plans that are administered by Cigna who were denied coverage based on the insurer’s use of its PxDx algorithm.

Specifically, the judge allowed at least some of the plaintiffs to proceed with their breach of fiduciary claim under the Employee Retirement Income Security Act, according to which Cigna failed in its obligation to have a medical director evaluate the necessity of a procedure for which the insured sought compensation.

The judge wasn’t persuaded by Cigna’s argument that, since its doctors are the ones who use the algorithm, they are in compliance with the health plans’ requirements.

“Defendants’ interpretation of the plan provision requiring determinations of medical necessity be made by a medical director — as allowing an algorithm to make the decision so long as a medical director pushes the button — conflicts with the plain language of the plan and constitutes an abuse of discretion,” Drozd observed in concluding that the plaintiffs had adequately plead a breach of fiduciary duty.

Likewise, he allowed a subset of the named plaintiffs to proceed on their California unfair competition law claims.

He granted, however, Cigna’s request to dismiss their claims for wrongful denial of benefits because they didn’t identify the specific terms of their health insurance plans that entitled them to those benefits and instead relied on Cigna’s medical coverage policy, which isn’t itself a plan, or just referred to “covered health services” in general.

Given that it was the first time the judge ruled on a motion to dismiss in the case, he gave the plaintiffs the benefit of the doubt and allowed them the opportunity to file an amended complaint to address these shortcomings.

The judge also dismissed the claims of three of the plaintiffs whose benefit determinations according to Cigna weren’t evaluated by the algorithm and who, as such, lacked standing.

When weighing a motion to dismiss, a judge will focus on whether the plaintiffs have met their burden to state a plausible legal claim. He doesn’t decide on the merits of that claim.

Representatives of Cigna and lawyers for the plaintiffs didn’t immediately respond to requests for comment on the ruling.

Cigna was sued in 2023 following a ProPublica report that it relied on the PxDx, corporate shorthand for procedure-to-diagnosis, to deny claims in bulk as medically unnecessary without having medical professionals review them.

According to ProPublica, a single Cigna doctor would deny as many as 60,000 claims a month by using the algorithm. The insurer would take just 1.2 seconds to deny claim, the report said.

“Defendants have deliberately failed to fulfill their statutory obligation to review individual claims in a ’thorough,’ ‘fair,’ and ‘objective’ manner, instead denying the claims for medical expenses of its California insureds without conducting any investigation, let alone a thorough, fair, or objective investigation,” the plaintiffs said in their amended [complaint](http://Defendants have deliberately failed to fulfill their statutory obligation to review individual claims in a “thorough,” “fair,” and “objective” manner, instead denying the claims for medical expenses of its California insureds without conducting any investigation, let alone a thorough, fair, or objective investigation.) last year.

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