July 28, 2023 : Health insurance giant Cigna is facing a class-action lawsuit filed in federal court in Sacramento, alleging that the company used a computer algorithm to automatically reject over 300,000 patient claims in just two months last year. The lawsuit accuses Cigna Corp. and Cigna Health and Life Insurance Co. of violating California law, which requires insurers to examine claims individually and conduct “thorough, fair, and objective” investigations of submitted medical bills.
The algorithm, known as PXDX (procedure-to-diagnosis), was employed by Cigna to determine whether claims met specific requirements. According to the lawsuit, the algorithm spent an average of only 1.2 seconds on each review, and the claims were then sent in bulk to doctors who approved the denials without examining patient files.
As a result of the alleged practices, thousands of patients were left without coverage and faced unexpected medical bills. The lawsuit contends that Cigna used an “illegal scheme” to systematically and wrongfully deny claims for necessary medical procedures to avoid payment.
The lawsuit was filed on behalf of two Cigna members in California who were forced to pay for medical tests after their claims were denied. It seeks unspecified damages and a jury trial.
With 18 million U.S. members, Cigna, including over 2 million in California, has defended its process, stating that the algorithm expedites payments to physicians for common, relatively inexpensive procedures. The company claims that the review takes place after patients have received treatment and does not result in any denials of care. Cigna also asserts that if codes are submitted incorrectly, clear guidance is provided on resubmission and the appeal process.
In response to the lawsuit, Cigna Healthcare characterized the legal action as questionable based on a misleadingly reported article. The company maintains that its process aligns with industry standards and aims to streamline physician reimbursement.