When 37 major health insurance companies sued SmithKline Beecham late last month in a multimillion-dollar fraud and racketeering case, one insurance company was conspicuously absent from the list of plaintiffs.
It's Cigna HealthCare, one of SmithKline's business partners.
Since 1995 SmithKline has been Cigna's sole supplier of laboratory tests ordered by physicians under a risk-sharing contract.
The Bloomfield, Conn.-based insurer's arrangement with the clinical laboratory division of SmithKline has some hospital-based laboratory operations crying over lost revenues (June 30, p. 72).
Cigna's lack of participation in the industrywide action against SmithKline raises several questions. If the allegations against SmithKline are true, how did Cigna escape the alleged improper billing practices by the pharmaceutical company? Or was Cigna affected but is being loyal to its business partner?
It appears to be the latter. Cigna confirmed in a statement last week*that it's working privately with SmithKline to settle any disputed claims for services.
The 37 insurers contend SmithKline overbilled them for clinical laboratory testing services. The suit was filed in U.S. District Court in Hartford, Conn. (Aug. 25, p. 14). The plaintiffs include Aetna U.S. Healthcare, Humana, Mutual of Omaha Insurance Co., NYLCare, Prudential Insurance Company of America and 19 Blue Cross and Blue Shield plans.
"In the aggregate (the insurers) pay for a substantial portion of the privately funded healthcare in the United States," the suit said.
The case piggybacks on the settlement of similar billing charges by Medicare and Medicaid. In February SmithKline, which has U.S. headquarters in Philadelphia, agreed to pay the federal government $325 million to settle those allegations (March 3, p. 28). The company denied any wrongdoing.
SmithKline also denies wrongdoing in the case of the insurers, saying their charges are "grossly exaggerated." The company promised to vigorously defend itself in court.
Although Cigna is not a plaintiff in the lawsuit, it said it's "actively engaged in direct negotiations with several clinical laboratories, including SmithKline, to settle disputed claims. We feel this achieves the same end as the plaintiffs are seeking in their lawsuit but without the cost and uncertainty of litigation."
Cigna is in contract negotiations with SmithKline. Its current single-source contract expires at the end of this year.
"We are satisfied that our affiliation with SmithKline Beecham is working well," Cigna said.
Cigna spokesman Wendell Potter said its claims disputes with SmithKline haven't been characterized as fraudulent. Cigna monitors vendor claims on an ongoing basis, which generally keeps billing errors from getting out of hand, he said.