Cigna Health Giant Accused of Improperly Rejecting Thousands of Patient Claims Using an Algorithm

SACRAMENTO, Calif. (AP) -- A federal lawsuit alleges that health insurance giant Cigna used a computer algorithm to automatically reject hundreds of thousands of patient claims without examining them individually as required by California law.

The class-action lawsuit, filed Monday in federal court in Sacramento, says Cigna Corp. and Cigna Health and Life Insurance Co. rejected more than 300,000 payment claims in just two months last year.

The company used an algorithm called PXDX, shorthand for ''procedure-to-diagnosis," to identify whether claims met certain requirements, spending an average of just 1.2 seconds on each review, according to the lawsuit. Huge batches of claims were then sent on to doctors who signed off on the denials, the lawsuit said.

"Relying on the PXDX system, Cigna's doctors instantly reject claims on medical grounds without ever opening patient files, leaving thousands of patients effectively without coverage and with unexpected bills," according to the lawsuit.

Ultimately, Cigna conducted an "illegal scheme to systematically, wrongfully and automatically" deny members claims to avoid paying for medical necessary procedures, the lawsuit contends.

Connecticut-based Cigna has 18 million U.S. members, including more than 2 million in California.

The lawsuit was filed on behalf of two Cigna members in Placer and San Diego counties who were forced to pay for tests after Cigna denied their claims.

The lawsuit accuses Cigna of violating California's requirement that it conduct "thorough, fair, and objective" investigations of bills submitted for medical expenses. It seeks unspecified damages and a jury trial.

Cigna "utilizes the PXDX system because it knows it will not be held accountable for wrongful denials" because only a small fraction of policyholders appeal denied claims, according to the lawsuit.

In a statement, Cigna Healthcare said the lawsuit "appears highly questionable and seems to be based entirely on a poorly reported article that skewed the facts."

The company says the process is used to speed up payments to physicians for common, relatively inexpensive procedures through an industry-standard review process similar to those used by other insurers for years.

"Cigna uses technology to verify that the codes on some of the most common, low-cost procedures are submitted correctly based on our publicly available coverage policies, and this is done to help expedite physician reimbursement," the statement said. "The review takes place after patients have received treatment, so it does not result in any denials of care. If codes are submitted incorrectly, we provide clear guidance on resubmission and how to appeal."