Cigna’s ‘kickback’ suit fails, opinion finds insurer should pay $13.7M to Humble Surgical Hospital

By David Yates | Jun 14, 2016

HOUSTON – An area health care provider has prevailed in a kickback lawsuit brought by Cigna Health and Life Insurance, capturing an award of nearly $13.7 million.

Seeking relief under the Employee Retirement Income Security Act, Cigna, along with Connecticut General, filed suit against Humble Surgical Hospital on Nov. 7, 2013 in federal court, accusing the out-of-network, physician-owned hospital of “excessive and fraudulent billing.”

Cigna charged Humble Surgical with “gouging” the company for millions, alleging the hospital engaged “in healthcare profiteering” by entering into fee-splitting contracts with physicians who refer patients to the out-of-network facility.

“Neither Humble, nor the doctors to whom it pays these fee-splitting referral fees, disclose to the patients that the doctors receive kickbacks for using Humble,” the suit states.

“The patients often are told that Humble is a better facility than the in-network option, or Humble is the only choice the doctors provide to their patients. This violates Texas disclosure requirements and also misleads patients about their choice of health care providers and in-network options.”

Within a month of being sued, Humble Surgical fired back with a countersuit, contending Cigna “intentionally or recklessly” underpaid approved claims for services provided, court records show.

Earlier this year, Humble Surgical moved for judgment. A bench trial took place and on June 1 U.S. District Judge Kenneth Hoyt issued a memorandum opinion, finding that: “The evidence is undisputed that before Humble scheduled any procedure for a member/patient, it contacted Cigna and confirmed eligibility, coverage and benefits for the procedure.”

The court rejected all of Cigna's claims for relief and Humble Surgical prevailed on its underpayment counterclaims under ERISA in the amount of $11,392,273, the opinion states.

Judge Hoyt further found the hospital is entitled to recover penalties in the amount of $2,299,000 for Cigna’s bad faith and breach of fiduciary duties, together with attorney’s fees, pursuant to ERISA and Declaratory Judgment Act.

The hospital's lead attorney, Brian Melton of Susman Godfrey, told the Record that the final judgment, which has not been issued as of June 14, will likely include prejudgment interest and attorney fees, adding another $3.5M to the award.

The hospital issued a statement after the ruling, stating: "We are pleased with the court’s support of Humble Surgical Hospital’s operations and practices, the rights of patients to use their out-of-network benefits and ultimately the proper treatment of healthcare providers across the nation."

Humble Surgical is also represented by Susman Godfrey attorneys Jonathan Ross, Chanler Langham and John Lahad.

Andrews Kurth attorneys John Shely and Brian Pidcock represent Cigna.

The cause was filed in the U.S. District Court for Southern Texas, Houston Division, case No. 4:13-cv-03291.

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