ANDREW HECHT and ANDREA HECHT v. THE CIGNA GROUP
No. 24 CV 5926
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION
February 27, 2025
Judge Manish S. Shah
Case: 1:24-cv-05926 Document #: 36 Filed: 02/27/25 Page 1 of 16 PageID #:247
Plaintiffs Andrew and Andrea Hecht took their son to Edward-Elmhurst Hospital for emergency treatment. While there, Andrew also received treatment for a sprained ankle. Defendant Cigna administered the Hechts’ insurance plan. Cigna processed the Hechts’ medical claims as in-network and determined that the Hechts owed 20% of the covered expenses in co-insurance. Later, the hospital sent the Hechts bills for the costs not covered by Cigna, claiming that it was out-of-network. The Hechts called Cigna multiple times and were reassured that the hospital was an in-network provider. The hospital continued to say it was out-of-network and sent the balance bills to collections. After two years of calling Cigna and the hospital, Cigna told the Hechts that it would investigate the network dispute, file a complaint with the hospital, and get the bills out of collections. The Hechts never heard back. The Hechts bring claims under
I. Legal Standard
When reviewing a
II. Facts
In September 2021, plaintiffs Andrew and Andrea Hecht took their son to Edward-Elmhurst Hospital due to severe hip pain. [1] ¶ 22.1 Their son was admitted, and Andrew received an x-ray and treatment for an unrelated injury. [1] ¶¶ 23–24.
The Hechts were insured by defendant The Cigna Group‘s LocalPlus Medical Benefits Health Savings Account Consumer Driven Plan through Andrew‘s employer. [1] ¶ 18. Under the Plan, in-network emergency services were covered at 80%, with the Hechts responsible for 20% in co-insurance. [1-1] at 21. Out-of-network emergency services were covered at the in-network cost sharing level. [1-1] at 15; [1-1] at 21. The Plan would pay 80% of an allowable amount, determined by Cigna with the out-of-network provider or by Cigna alone. [1-1] at 15. The Hechts were responsible for 20% co-insurance, as well as any charges made above the allowable amount. [1-1] at 15. If an out-of-network provider billed members for amount higher
In October 2021, the Hechts received bills from the hospital for all charges not covered by Cigna. [1] ¶ 27. These statements indicated that the hospital was an out-of-network provider. Id. But Cigna‘s EOBs for the visits listed the hospital‘s “provider network status” as “in network.” Id.; [1-2] at 2; [1-3] at 2. The EOBs explained that because the hospital was in-network, Cigna negotiated a discount on the charges. [1-2] at 2; [1-3] at 2. The EOBs said that by “using CIGNA‘s Open Access Plus Network[,] [t]he discount shown is how much you saved. You don‘t need to pay that amount. If you already paid your health care professional more than the ‘What I Owe’ amount, please ask for a refund.” [1-2] at 4; [1-3] at 5. The EOBs also warned “Health Care Professionals” that their “CIGNA Agreement does not allow [them] to bill the patient for the difference.” Id.
The Hechts called Cigna, which confirmed that the hospital was in network and that the Hechts only owed the co-insurance balances reflected on the EOBs. [1] ¶¶ 28-29. Cigna‘s agent initiated a three-way conference call with a hospital representative and the Hechts. [1] ¶ 29. The Cigna agent told the hospital that it was in-network and the out-of-network charges on the billing statements were incorrect. Id.
When the hospital bill did not change, Andrew went to the hospital to speak with someone in the billing department. [1] ¶ 30. No billing personnel were on site,
Fearing that the hospital would send the accounts to collections, the Hechts paid the amounts owed according to the EOBs. [1] ¶¶ 31-32. The disputed portion of the bills remained unresolved, and the hospital continued to send bills. [1] ¶ 33. For months, Andrew made calls to both the hospital and Cigna, including several three-way conference calls. [1] ¶ 35. Cigna‘s representatives maintained that the services were in-network, while the hospital continued to say it was out-of-network. Id.
Around May 2022, the hospital sent the accounts to a collection agency. [1] ¶ 34. In September 2022, Andrew called the collection agency to inform them that the debts were invalid. [1] ¶ 34. That same month, the hospital told Andrew that it sent the outstanding accounts to its “external claim pricing team.” [1] ¶ 36. In February 2023, the collection agency closed the Hechts’ accounts and sent the debts back to the hospital. [1] ¶ 37. The hospital sent the debts to a new collection agency in April 2023. Id. By December 2023, the Hechts’ credit scores had dropped significantly. Id.
Andrew had another three-way conference call with hospital and Cigna representatives. [1] ¶ 38. The hospital agent told Andrew that an account review determined that the services were out-of-network and gave Andrew the name of the hospital billing supervisor. Id. Andrew contacted the billing supervisor in December 2023 and January 2024. [1] ¶ 39. In mid-January 2024, the hospital billing supervisor responded that the services were out-of-network and nothing could be done. [1] ¶ 41.
During this time, Cigna told Andrew that the issue would be escalated to its Provider Support Investigations Unit, and that Cigna would file a complaint with the hospital to rectify the incorrect network status and get the accounts out of collections. [1] ¶ 39. The agent told Andrew that the hospital had been in-network since 2003, and that Cigna would convey all the information needed to demonstrate that the services should have been billed as in-network. Id. Andrew was told that the investigation would take at least 30 days, plus an additional 15 days to get the accounts out of collection. [1] ¶ 40. Cigna never followed up with the Hechts. [1] ¶ 42.
The Hechts filed this lawsuit under
III. Analysis
A. ERISA § 502(a)(1)(B)
Cigna moves to dismiss the Hechts’
Documents attached to a complaint “become part of the complaint and may be considered as such when the court decides a motion attacking the sufficiency of the complaint.” Williamson v. Curran, 714 F.3d 432, 436 (7th Cir. 2013); see also
The Hechts raise multiple theories of how Cigna breached the Plan‘s term, generally falling into two categories. First, Cigna allegedly failed to properly determine and pay benefits on behalf of the Hechts. [1] ¶¶ 65–66. Second, Cigna did not resolve the network dispute with the hospital and did not “provide a full and fair review” to resolve the discrepancies. Id.
1. Benefits Due
Cigna did not deny the Hechts any benefits due to them under the Plan. Indeed, the Hechts admit in their response to Cigna‘s motion to dismiss that “there has been no denial of benefits” here. [25] at 10. The Plan terms are clear. Cigna was
While the complaint alleges that the hospital was an in-network provider, the Hechts also claim that Cigna failed to accurately communicate the hospital‘s network status, suggesting that the hospital was indeed out-of-network. [1] ¶ 66. The Hechts do not point to any Plan provision that Cigna breached when it allegedly provided incorrect status information about the hospital. Further, even if the hospital were an out-of-network provider and Cigna made a mistake when determining benefits, there was no breach of the Plan‘s terms. Out-of-network emergency services are covered at the in-network cost sharing level. [1-1] at 15; [1-1] at 21. The Plan requires Cigna to cover 80% of an allowable amount for emergency expenses provided by out-of-network providers. [1-1] at 15. Members are responsible for any charges beyond the allowable amount and out-of-network providers may balance bill members for that remainder. Id. The benefits due to the Hechts—Cigna paying 80% of the emergency services (up to the covered or allowable amount)—are the same regardless of whether the hospital was in-network or out-of-network. See id.
2. Network dispute
The Hechts claim that Cigna breached the Plan terms by failing to resolve the network dispute, leading to the Hechts paying more than 20% of the contracted amount. [1] ¶¶ 65–66. They argue that they should have only been charged 20% coinsurance of the covered expenses, and that Cigna breached this term by allowing the hospital to balance bill the Hechts. [25] at 7–8. But Cigna adjudicated the Hechts’ benefits correctly, in accordance with the Plan terms. It is the hospital, not Cigna, that is charging the Hechts more than 20% of the covered expenses.
The Hechts argue that “Cigna is obligated to ensure that its coverage determinations and computation of benefit payments are accurate. If any discrepancy should arise, it is the responsibility of Cigna, not the Plan beneficiaries, to arbitrate and determine where any errors may have occurred.” [25] at 8 n.3; [1] ¶ 49. To support this claim, the Hechts point to a section of the Plan that explains “ERISA imposes duties upon the people responsible for the operation of the employee benefit plan. The people who operate your plan, called ‘fiduciaries’ of the Plan, have a duty to do so prudently and in the interest of you and other plan participants and beneficiaries.” [1-1] at 69; [25] at 8 n.3. This clause explains Cigna‘s fiduciary duties under ERISA but does not create a contractual obligation to persuade the hospital that Cigna correctly calculated benefits or determined coverage.
The Hechts also say that they were denied a “full and fair review in order to resolve the discrepancies between [Cigna‘s] determinations and the [hospital‘s]
The Hechts do not point to any Plan terms that Cigna breached when it failed to resolve the network dispute with the hospital and did not prevent the hospital from balance billing the Hechts. The Hechts’
B. ERISA § 502(a)(3)
To state a claim for breach of fiduciary duty, a plaintiff must allege that the defendant is a plan fiduciary, the defendant breached its duty, and that the breach
Cigna does not challenge that it was a plan fiduciary, nor the sufficiency of the Hechts’ allegations of harm. Cigna characterizes the Hechts’ alleged breach as “[a]t most,... a miscommunication to Plaintiffs about the Hospital‘s network status by Cigna, which resulted in Plaintiffs not paying their balance bills from the Hospital.” [16] at 16. Cigna argues that the Hechts’ claim fails because a fiduciary breach claim premised on a Plan representative‘s misstatement requires an intent to deceive, which the Hechts do not allege. [16] at 16–17. Cigna is correct that “mistakes in the advice given to an insured which are attributable to the negligence of the individual supplying that advice are not actionable as a breach of fiduciary duty.” Kenseth v. Dean Health Plan, Inc., 722 F.3d 869, 873 (7th Cir. 2013).
But miscommunication is not the basis for the Hechts’ breach of fiduciary duty claim. While the Hechts mention potential miscommunication in the complaint‘s facts and their
The Plan is clear that in-network providers have contracted with Cigna and agreed to accept a negotiated, discounted price, ensuring members get a better deal on their healthcare costs. [1-1] at 77 (“Participating Providers” are “person[s] or entit[ies] that ha[ve] a direct or indirect contractual arrangement with Cigna to provide covered services and/or supplies, the Charges for which are Covered Expenses.“); [1-1] at 82 (“Your costs are lower for services from Cigna contracted health care professionals and facilities because they have agreed to accept discounted payments to help you make the most of your health care dollars.“); [1-1] at 84 (“If you choose to see a Cigna participating health care professional, the cost is based on discounted rates, so your costs will be lower.“).
Cigna‘s EOBs reiterated that Cigna contracted with in-network providers and negotiated discounts to lower rates and save members money. [1-2] at 2 (“CIGNA negotiates discounts with health care professionals and facilities to help you save money.“); [1-3] at 2 (same); [1-2] at 3 (defining “In-Network” as a “group of health care providers that have a contract with Cigna to provide you with health care coverage. Using in-network providers will save you money.“); [1-3] at 3 (same). The EOBs explained that members were not responsible for the discounted amount. [1-2] at 4;
When seeing an in-network provider for emergency services, the Hechts should have only been responsible for 20% co-insurance of the negotiated, discounted amount. [1-1] at 21. If the hospital was an in-network provider, as the Hechts allege and Cigna maintained, it should not have been able to charge the Hechts for any remaining balance under the Plan.
Cigna was on notice, for over two years, that one of its in-network providers was balance billing its member, in violation of its contract with Cigna to accept the discounted payment. See [1] ¶ 28 (the Hechts first called Cigna about the network dispute in October 2021). Yet Cigna did not resolve the dispute or enforce its contract with the hospital—negotiated for the advantage of its beneficiaries—leaving the Hechts with erroneous balance bills that are still in collections.
While the complaint lacks concrete details of how Cigna‘s investigation (or lack thereof) into the network dispute breached its fiduciaries duties, the Hechts are not privy to this information, arguably in part because Cigna stopped communicating with them. See Allen, 835 F.3d at 678 (recognizing ERISA plaintiffs often lack “the inside information necessary to make out their claims in detail” until discovery). Taking their allegations as true, the Hechts have alleged a “plausible story” that Cigna did not operate the Plan prudently and in the interest of its members when it did not resolve the network dispute, either by correcting its own erroneous benefits determination or by using its leverage over an in-network provider to correct the
Cigna‘s motion to dismiss the
C. Exhaustion of Administrative Remedies
Although ERISA‘s text is silent on the issue, courts interpret the statute to require exhaustion of administrative remedies as a prerequisite to bringing a suit. Di Joseph v. Standard Ins. Co., 776 F. App‘x 343, 348 (7th Cir. 2019); see also Lindemann v. Mobil Oil Corp., 79 F.3d 647, 650 (7th Cir. 1996) (holding exhaustion requirement is applicable to all ERISA claims, not just claims for benefits). A plaintiff‘s failure to exhaust administrative remedies is an affirmative defense that they need not anticipate in their complaint, but dismissal is appropriate when a plaintiff pleads themselves out of court “by alleging facts that are sufficient to establish the defense.” See Hollander v. Brown, 457 F.3d 688, 691 n.1 (7th Cir. 2006); Hess v. Reg-Ellen Mach. Tool Corp. Emp. Stock Ownership Plan, 502 F.3d 725, 729–30 (7th Cir. 2007).
Courts generally excuse a plaintiff‘s failure to exhaust “when resort to administrative remedies would be futile, when the remedy provided is inadequate, or
The Hechts admit that they did not file any appeals or follow the Plan‘s appeal procedure for adverse benefits determinations. [1] ¶ 49. They argue that the available administrative remedies were inapplicable to their situation, so they did not have meaningful access to effective review procedures for their issue and using the available procedures meant for other disputes would have been futile. [1] ¶ 49; [25] at 8–11.
Despite their admission, the Hechts have not pled themselves out of court. The Plan‘s prescribed appeal procedure is designed to review Cigna‘s adjudication of a claim, i.e., appealing an adverse determination or denial of benefits. [1-1] at 64. An adverse benefit determination is a “denial, reduction, or termination of, or a failure to provide or make payment (in whole or in part) for, a benefit.”
The Plan limits the available administrative process to appealing adverse benefit determinations, which suggests the Hechts did not have access to a
Based on the allegations and plan, the Hechts’ complaint does not establish the affirmative defense. Cigna‘s motion to dismiss is denied.
D. Leave to amend
Cigna argues that the correct defendant in this case should be the plan administrator, Cigna Health and Life Insurance Company. [16] at 19. The Hechts4
IV. Conclusion
Defendant‘s motion to dismiss, [15], is granted as to plaintiffs’
ENTER:
Manish S. Shah
United States District Judge
Date: February 27, 2025