Two Cigna members filed a lawsuit seeking class-action status in a California federal court on Monday, alleging the health insurance company leveraged an algorithm to improperly deny claims and systematically shift costs to its 2.1 million Golden State members.
Lawyers anticipate more insurers will be hit with similar complaints as carriers increasingly automate their claims management processes.
Enrollees Suzanne Kisting-Leung and Ayesha Smiley sued Cigna in the U.S. District Court for the Eastern District of California, alleging the company used an algorithm called PXDX to review patient claims, which violated its fiduciary duty dictated by state law.
The two are seeking monetary damages and an injunction for the health insurance company to stop using PXDX in claims management.
"PXDX is a simple tool to accelerate physician payments that has been grossly mischaracterized in the press," a Cigna spokesperson wrote in response to a request for comment. "The facts speak for themselves and we will continue to set the record straight."
As alleged in court documents, Kisting-Leung’s doctors recommended she receive ultrasound screenings for ovarian cancer twice last year, and Cigna denied both claims by arguing they lacked medical necessity, leaving Kisting-Leung to pay nearly $750 out-of-pocket. Kisting-Leung appealed the denials but has yet to hear back from Cigna about the status of the bills, the complaint alleges.
Cigna also denied paying for a vitamin D deficiency test for Smiley in January by arguing the service lacked medical standing, the lawsuit alleges.
“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,” the complaint reads.
Lawyers from the Clarkson Law Firm representing Kisting-Leung and Smiley aim to identify in discovery how Cigna clinicians were instructed to use the technology, for which procedures it was used to evaluate medical necessity, and how and why Cigna decided to deploy the tool, partner Glenn Danas said. The law firm also aims to learn how PXDX affected payment to physicians, he said.
Clarkson is investigating the extent to which other large health insurers use similar tools, Danas said.
"We're definitely looking at a couple of other companies, in particular, to see if they essentially delegated their claims determination process to machines," he said.
By calling into question insurers' alleged automation of coverage decisions, Clarkson's lawsuit represents a new take on the classic dispute between patients and health insurers over whether their claim was wrongfully denied, said Henry Noye, a partner at the Obermayer Rebmann Maxwell & Hippel law firm who specializes in insurance coverage disputes.
Insurers will face more lawsuits over their alleged use of automation tools and have likely done the math and decided to continue developing the technology anyway, Noye said. That suggests insurers believe the potential savings on labor costs, and the increased accuracy and speed in clinical decision-making, outweighs their potential legal risk, he said.
“This is a new frontier, all this stuff is so novel,” he said. “Companies are going to get sued, and I just think that’s sort of the cost of doing business.”
In some ways, carriers automating medical necessity decisions, including by using artificial intelligence, could offer less legal liability than human reviewers, because it indicates companies have taken a systematic approach to coverage decisions that can be backed by clinically validated rationale, said Erik Gordon, a professor at the University of Michigan Ross School of Business.
“If there’s litigation, people can look at it and see exactly what you’ve done,” Gordon said. “Whereas, with people using their judgment, their judgment can change three degrees from the last one, and not uniformly. This person rejects a few more claims, this person doesn’t reject more claims.”
The Cigna spokesperson said that PXDX does not use AI.
Monday's lawsuit comes in the wake of a March report by the ProPublica news outlet that Cigna used PXDX to reject bundles of patients’ claims for healthcare services without reviewing individual members' medical necessity. The report triggered an investigation by the House Energy and Commerce Committee, as well as several state and federal regulators, in May. The investigation is ongoing.
The Senate Permanent Subcommittee on Investigations in May also subpoenaed CVS Health, Humana and UnitedHealth Group for internal documents about how the companies use AI to approve or deny Medicare Advantage members' claims.