Cigna Automatically Denies Insurance Claims Without Required Review Process, Class Action Says

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Cigna Corporation and Cigna Health and Life Insurance Company face a proposed class action over their allegedly unlawful use of an algorithm to systemically deny batches of insurance claims without conducting individualized reviews.

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According to the 22-page lawsuit out of California, insurance companies are required under state law to conduct a “thorough, fair, and objective” investigation into each submitted claim to determine if the payment is medically necessary.

However, rather than employ medical directors to examine patient records, review coverage policies and use their expertise to approve or deny claims, Cigna instead uses an algorithm known as PXDX—which stands for “procedure-to-diagnosis”—to automatically review, process and deny thousands of claims at once, the suit contends.

More specifically, the PXDX system uses an algorithm to identify and deny claims based on “discrepancies between diagnoses and what Defendants consider acceptable tests and procedures for those ailments,” the complaint explains. The filing claims that Cigna doctors then sign off on the denials without opening each patient’s file to complete the legally-required process for reviewing patient claims.

As a result of this automated process, thousands of patients who have submitted bills to Cigna for medically necessary expenses supposedly covered by their plan terms have had their claims unfairly denied, the case argues. These covered members are wrongfully left without coverage and forced to incur unexpected bills, the suit relays.

“The scope of this problem is massive,” the lawsuit says, citing a March 2023 report by ProPublica. “For example, over a period of two months in 2022, Cigna doctors denied over 300,000 requests for payments using this method, spending an average of just 1.2 seconds ‘reviewing’ each request.”

Per the filing, the PXDX system helps Cigna save money by allowing it to deny claims it would have otherwise paid and cut labor costs associated with conducting manual reviews.

“Cigna also utilizes the PXDX system because it knows it will not be held accountable for wrongful denials,” the case contends. “For instance, Cigna knows that only a tiny minority of policyholders (roughly 0.2%) will appeal denied claims.”

The complaint further alleges that the defendants have failed to provide policyholders with written statements informing them of the insurance company’s decision to deny their claim and listing the reasons why their claim was denied, as required by California law.

The lawsuit looks to cover anyone who purchased health insurance from Cigna in the United States during the applicable statute of limitations period.

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