Case 2:21-cv-02308 Document 1 Filed 05/13/21 Page 1 of 25 PageID 1
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TENNESSEE
`WESTERN DIVISION
`
`
`
`
`
`AMISUB (SFH), INC. d/b/a SAINT FRANCIS
`HOSPITAL and SAINT FRANCIS HOSPITAL –
`BARTLETT, INC.,
`
`Plaintiffs,
`
`
`
`
`
`v.
`
`
`
`
`
`CIGNA HEALTH AND LIFE INSURANCE
`COMPANY,
`
`
`
`
`
`
`
`Defendant.
`
`
`
`
`
`
`CASE NO:
`
`
`
`
`
`Jury Trial Demanded
`
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`
`
`COMPLAINT
`
`Plaintiffs AMISUB (SFH), Inc. d/b/a Saint Francis Hospital (“Saint Francis”) and Saint
`
`Francis Hospital – Bartlett, Inc. (“Bartlett”) (collectively, St. Francis and Bartlett are referred to as
`
`“Plaintiffs” or the “Hospitals”), by and through undersigned counsel, sue Defendant Cigna Health
`
`and Life Insurance Company (“Cigna”),1 and allege as follows.
`
`NATURE OF THE ACTION
`
`1.
`
`The Hospitals bring this lawsuit to assert their right to full payment from Cigna in
`
`connection with emergency services the Hospitals provided to Cigna’s insureds. Cigna has failed
`
`to pay the Hospitals adequately for medically necessary emergency health care services that the
`
`Hospitals provided in their emergency rooms located in Shelby County, Tennessee. Cigna, on
`
`behalf of the plans that it underwrites and insures itself and on behalf of the Self-Funded Plans it
`
`
`1 Cigna also administers health plans that are either sponsored by public or private employers for
`the benefit of their respective employees, referred to as “Self-Funded Plans.”
`
`

`

`Case 2:21-cv-02308 Document 1 Filed 05/13/21 Page 2 of 25 PageID 2
`
`administers, is required to pay the reasonable value of services rendered to patients by the Hospitals
`
`and covered under those health plans. Health plan beneficiaries for whom the Hospitals performed
`
`services without full reimbursement and which are not governed by an express contract are referred
`
`to herein as “Cigna Members.”
`
`2.
`
`With respect to all of the claims at issue in this lawsuit, the Hospitals were non-
`
`participating providers, meaning they did not have an express contract with Cigna or the Self-
`
`Funded Plans to accept discounted rates for their services, nor did they ever agree to be bound by
`
`Cigna’s reimbursement policies or rate schedules for the claims it administers on behalf of itself
`
`or the Self-Funded Plans. Specifically, the reimbursement claims at issue in this action are only
`
`those non-participating commercial claims (including for patients covered by Affordable Care Act
`
`
`health insurance exchange products (the “Exchange”))
`
`that Cigna adjudicated as covered and
`
`allowed as payable for services rendered on and after January 1, 2019 at rates below the billed
`
`charges and the reasonable value of the services rendered, as measured by the community where
`
`they were performed and by the facilities and persons who provided them (collectively, the “Non-
`
`Participating Claims”).2
`
`3.
`
`Federal and Tennessee law both obligate hospitals offering emergency services to
`
`evaluate, examine, and treat all patients who come into an emergency room, regardless of the
`
`existence, or extent, of insurance coverage, and regardless of a patient’s ability to pay for the care.
`
`4.
`
`Similarly, insurance companies like Cigna and self-funded insurance plans like the
`
`Self-Funded Plans are legally and contractually obligated to ensure that their members receive
`
`
`2 Cigna offers multiple different health insurance products in the Memphis market. The Hospitals
`participate in the network for some of these products, but not others. The Non-Participating Claims
`all involve services rendered to Cigna Members who are enrolled in health insurance plans or
`products in which the Hospitals do not participate. As such, no contracts govern or specify the
`reimbursement rate for the Non-Participating Claims.
`
`
`
`2
`
`

`

`Case 2:21-cv-02308 Document 1 Filed 05/13/21 Page 3 of 25 PageID 3
`
`such services. Indeed, Cigna markets its insurance products as providing coverage for emergency
`
`care, 24 hours a day, 7 days a week, 365 days per year, and without the need to obtain prior
`
`approval for the services.
`
`5.
`
`Thus, hospitals that provide emergency medical care to payors’ members, as the
`
`Hospitals in this case do for Cigna Members, relieve payors of the immense burden they carry to
`
`provide their members with emergency medical care regardless of when, where, or to what extent
`
`their members need it.
`
`6.
`
`Under such circumstances, an equitable obligation arises to account for the benefit
`
`the hospitals provide to the payors. It requires that payors pay hospitals the reasonable value of the
`
`services rendered, as measured by the community where they were performed. In the absence of
`
`such an obligation, payors would have free reign to enrich themselves unjustly at the expense of
`
`the hospitals by receiving premium payments from or on behalf of Cigna Members and/or fees
`
`from Self-Funded Plans to provide and cover emergency services, and in turn inappropriately
`
`retaining those payments without paying for the fair value of the emergency services Cigna is
`
`obligated to provide and cover.
`
`7.
`
`Here, at all material times, Cigna (for itself and as the claims administrator for the
`
`Self-Funded Plans) has satisfactorily determined that the Hospitals’ reimbursement claims were
`
`covered and medically necessary under the various health plans. Indeed, Cigna (on behalf of its
`
`fully insured plans and on behalf of the Self-Funded Plans it administers) adjudicated the Non-
`
`Participating Claims as payable, albeit at a rate far less than the reasonable value of the emergency
`
`medical care furnished.
`
`8.
`
`In fact, Cigna’s payments on the Non-Participating Claims, on average, have been
`
`nearly 50% lower than the already discounted rates at which Cigna reimbursed claims under the
`
`
`
`3
`
`

`

`Case 2:21-cv-02308 Document 1 Filed 05/13/21 Page 4 of 25 PageID 4
`
`plans in which the Hospitals were participating providers. By contrast, for the five and a half years
`
`prior to January 1, 2019, Cigna had an agreement with the Hospitals to reimburse out-of-network
`
`or non-participating services at 75% of the Hospitals’ billed charges, a smaller discount than the
`
`agreements for plans in which the Hospitals were participating providers reflecting that the
`
`Hospitals did not receive the benefits associated with being a participating provider. This
`
`accurately reflects the widely accepted and recognized industry norm that providers and payors
`
`agree to lesser discounts from the provider’s charges when the services rendered are “out-of-
`
`network” or “non-participating,” thereby reflecting the economic consequences of the absence of
`
`in-network benefits providers would otherwise receive.
`
`9.
`
`This action seeks redress for Cigna’s underpayments. The Hospitals seek damages
`
`in the amount of the difference between what Cigna (on behalf of its fully insured plans and on
`
`behalf of the Self-Funded Plans it administers) paid for the Non-Participating Claims and the
`
`reasonable value of the services rendered, as measured by the community where they were
`
`performed. By filing this lawsuit, the Hospitals seek recovery of the total amount underpaid by
`
`Cigna, plus interest for loss of use of that money, which damages are ongoing in nature as
`
`additional Non-Participating Claims accrue.
`
`10.
`
`In addition to their damages, the Hospitals also request an order from the Court
`
`declaring that, on a going forward prospective basis, Cigna (on behalf of its fully insured plans
`
`and on behalf of the Self-Funded Plans it administers) must pay the Hospitals the reasonable value
`
`of the emergency medical care they furnish to Cigna Members, as measured by the community
`
`where they were performed, and to be proven at trial.
`
`11.
`
`To be clear, and for avoidance of doubt, this lawsuit solely concerns the rate of
`
`payment to which the Hospitals are entitled under Tennessee law, not whether a right to receive
`
`
`
`4
`
`

`

`Case 2:21-cv-02308 Document 1 Filed 05/13/21 Page 5 of 25 PageID 5
`
`payment exists. This lawsuit does not challenge the right to receive payment under any plan
`
`governed by the Employee Retirement Income Security Act of 1974 (ERISA). Cigna’s
`
`underpayments (on behalf of its fully insured plans and on behalf of the Self-Funded Plans it
`
`administers) are an acknowledgement that the Hospitals’ services were covered and medically
`
`necessary under Cigna Members’ respective health plans. Thus, the Non-Participating Claims
`
`asserted herein do not concern any claims arising from the denial of benefits under any health plan,
`
`or the denial of coverage under any health plan for emergency medical care rendered to Cigna
`
`Members. In short, there is no dispute that the Hospitals are entitled (i.e., the right) to be paid for
`
`the services they rendered; this dispute concerns only the appropriate amount (i.e., the rate) of such
`
`necessary reimbursement.
`
`12.
`
`Neither Medicare Advantage nor managed Medicaid products are at issue in this
`
`action. The Non-Participating Claims only involve commercial and Exchange products that Cigna
`
`has underwritten and fully insures itself, or that Cigna administers on behalf of the Self-Funded
`
`Plans.
`
`13.
`
`Because Cigna has already conceded coverage and adjudicated the Non-
`
`Participating Claims as payable, this lawsuit does not challenge any coverage determination under
`
`any health plan that may be subject to ERISA.
`
`14.
`
`Nor does this lawsuit involve any claim by the Hospitals for benefits under a health
`
`plan based on an assignment of benefits from any Cigna Member. Defendant’s obligations to
`
`reimburse the Hospitals at a reasonable rate arise from legal duties predicated on contracts implied-
`
`in-fact and/or implied-in-law directly with the Hospitals, not pursuant to any assignment of any
`
`rights under the Cigna Members’ health plans.
`
`
`
`
`
`5
`
`

`

`Case 2:21-cv-02308 Document 1 Filed 05/13/21 Page 6 of 25 PageID 6
`
`PARTIES
`
`15.
`
`Plaintiff Saint Francis is a Tennessee corporation with a principal place of business
`
`in Tennessee. Saint Francis is an acute care hospital with an emergency department in Memphis,
`
`Tennessee.
`
`16.
`
`Plaintiff Bartlett is a Tennessee corporation with a principal place of business in
`
`Tennessee. Bartlett is an acute care hospital with an emergency department in Bartlett, Tennessee.
`
`17.
`
`Defendant Cigna is a Connecticut corporation with a principal place of business at
`
`900 Cottage Grove Road, Bloomfield, Connecticut 06002-2920. Cigna has a registered agent in
`
`Tennessee, care of CT Corporation System, 300 Montvue Road, Knoxville, Tennessee, 37919-
`
`5546. Cigna is responsible for paying for emergency medical care provided by the Hospitals to
`
`one or more Cigna Members.
`
`18.
`
`Cigna is a publicly traded, for-profit insurance company. It is licensed to issue
`
`health insurance policies in Tennessee, contracts with providers in Tennessee to render services to
`
`Cigna Members and markets and offers insurance policies to Tennessee citizens on the Exchange.
`
`JURISDICTION AND VENUE
`
`19.
`
`Subject matter jurisdiction exists by virtue of diversity of citizenship. See 28 U.S.C.
`
`§ 1332. The amount in controversy exceeds $75,000, exclusive of interest and costs, and there is
`
`complete diversity of citizenship.
`
`20.
`
`Since January 1, 2019, Cigna underpaid the Hospitals’ claims for services rendered
`
`to its members in thousands of patient encounters, totaling millions of dollars in underpayments.
`
`Both of these figures continue to grow as additional Cigna members present to the Hospitals for
`
`treatment on an ongoing basis. The damages suffered by the Hospitals therefore continue to
`
`increase.
`
`
`
`6
`
`

`

`Case 2:21-cv-02308 Document 1 Filed 05/13/21 Page 7 of 25 PageID 7
`
`21.
`
`Cigna is subject to personal jurisdiction in this Court, as it: (i) transacts business in
`
`this state (Tenn. Code § 20-2-214(a)(1)); (ii) has contracted to insure a person, property, or risk
`
`located within this state at the time of contracting (Tenn. Code § 20-2-214(a)(4)); and (iii) is not
`
`inconsistent with the constitution of the state or of the United States (Tenn. Code § 20-2-214(a)(6)).
`
`22.
`
`Venue is proper in this district because Defendant is a corporation and is subject to
`
`personal jurisdiction in this District. See 28 U.S.C. §§ 1391(b)(1), (c)(2). Moreover, venue is also
`
`proper in this District because a substantial part of the events or omissions giving rise to the claim
`
`occurred in this District. See id. § 1391(b)(2). The Hospitals rendered the services giving rise to
`
`the obligations at issue in Shelby County, the payments for those services were due in Shelby
`
`County, and therefore the claims arose and accrued in Shelby County.
`
`FACTUAL ALLEGATIONS
`
`The Payors
`
`23.
`
`Cigna is a national managed care organization that issues, underwrites and
`
`administers health plans in Tennessee, including plans offered to individuals and small businesses
`
`in Tennessee.
`
`24.
`
`The Self-Funded Plans offer health insurance to their respective beneficiaries,
`
`including coverage for emergency medical care, and have engaged Cigna as administrator.
`
`25.
`
`As the administrator for the Self-Funded Plans, Cigna is authorized and responsible
`
`for adjudicating and paying claims for reimbursement submitted by providers, including non-
`
`participating providers, who render services to beneficiaries of the Self-Funded Plans (who, in
`
`turn, are Cigna Members). The Self-Funded Plans fund accounts over which Cigna maintains
`
`custody and from which Cigna makes payments on the Self-Funded Plans’ behalf. The Self-
`
`Funded Plans have consented to Cigna’s administration of their plans, including authority for
`
`
`
`7
`
`

`

`Case 2:21-cv-02308 Document 1 Filed 05/13/21 Page 8 of 25 PageID 8
`
`Cigna to contract with providers, to adjudicate claims and to pay claims on behalf of beneficiaries
`
`of the Self-Funded Plans who are Cigna Members.
`
`26.
`
`In exchange for premiums and/or fees or other compensation, Cigna assumes
`
`responsibility for the payment of health care services, including emergency medical care, rendered
`
`to Cigna Members, whether from its own accounts for plans that Cigna fully insures or from
`
`accounts funded by the Self-Funded Plans and over which Cigna maintains custody for plans that
`
`Cigna administers.
`
`27.
`
`Cigna and the Self-Funded Plans’ responsibilities include providing coverage for
`
`emergency care, 24 hours a day, 7 days a week, 365 days per year, without the need to obtain prior
`
`approval for the services, and without the need to obtain those services from participating
`
`providers.
`
`28.
`
`Cigna and the Self-Funded Plans understand and expressly acknowledge that Cigna
`
`Members may seek emergency treatment from non-participating providers, and Cigna (on behalf
`
`of its fully insured plans and on behalf of the Self-Funded Plans it administers) is obligated to pay
`
`for those services.
`
`29.
`
`Upon information and belief, one or more Cigna benefit plans applicable to the
`
`Non-Participating Claims provide that Cigna (on behalf of its fully insured plans and on behalf of
`
`the Self-Funded Plans it administers) will hold the Cigna Member harmless for any amounts due
`
`to providers for emergency services that the Cigna Member would not have owed had the Cigna
`
`Member obtained services from a participating provider.
`
`30.
`
`Cigna provides Cigna Members with identification cards bearing Cigna’s logo.
`
`
`
`8
`
`

`

`Case 2:21-cv-02308 Document 1 Filed 05/13/21 Page 9 of 25 PageID 9
`
`31.
`
`The purpose of these identification cards is so that Cigna Members can furnish them
`
`to health care providers and that those providers will understand that the patient is a Cigna Member
`
`who has coverage under a health care policy issued, underwritten and/or administered by Cigna.
`
`The Hospitals
`
`32.
`
`Each of the Hospitals in this action has an emergency department that provides
`
`emergency services to patients in need of urgent medical care 24 hours a day, 7 days a week, 365
`
`days per year. Collectively, the Hospitals treat thousands of patients per year, including through
`
`their emergency departments. The value that the Hospitals provide to their communities in
`
`resolving medical exigencies such as these is enormous.
`
`33.
`
`At all material times, the Hospitals have not been participating providers with Cigna
`
`with respect to the Non-Participating Claims.3
`
`34.
`
`Each Non-Participating Claim is for reimbursement for services that the Hospitals
`
`provided to Cigna Members in good faith and at times when the Hospitals were not participating
`
`providers with Cigna with respect to those Cigna Members.
`
`35.
`
`At all material times, the Hospitals have not been a party to any express contract
`
`with Cigna (or the Self-Funded Plans) that governs the reimbursement, or any other aspect, of the
`
`services at issue provided to the Cigna Members. The Hospitals therefore were “out-of-network”
`
`providers with Cigna when they rendered the services that underpin the Non-Participating Claims
`
`at issue in this lawsuit.
`
`36.
`
`Despite their out-of-network status, the Hospitals provided emergency medical care
`
`to Cigna Members in good faith and as required by federal and Tennessee law.
`
`
`3 As noted above, although the Hospitals participate in the network for some Cigna products, the
`Non-Participating Claims all involve services rendered to Cigna Members who are enrolled in
`health insurance plans or products in which the Hospitals do not participate.
`
`
`
`9
`
`

`

`Case 2:21-cv-02308 Document 1 Filed 05/13/21 Page 10 of 25 PageID 10
`
`37.
`
`The Hospitals timely and directly billed Cigna (as the insurer of the fully insured
`
`plans or as the administrator of the Self-Funded Plans) for the emergency medical care provided
`
`to Cigna Members, with the reasonable expectation of being paid the reasonable value for those
`
`services.
`
`38.
`
`Cigna satisfactorily determined that the Non-Participating Claims were covered
`
`and medically necessary under the respective health plans.
`
`39. With respect to the Non-Participating Claims, the Hospitals have not agreed to
`
`accept any form of discounted rate from Cigna or the Self-Funded Plans or to be bound by Cigna’s
`
`payment policies or rate schedules with respect to the emergency medical care provided to Cigna
`
`Members.
`
`40.
`
`Providers frequently agree to accept discounted rates from payors to participate in
`
`their networks because of the benefits to the provider attributable to such participation, including
`
`that the payor will steer a significant volume of patients to the facility and will authorize elective
`
`procedures for its members at the facility. Because hospitals do not receive any such benefits from
`
`treating patients in their emergency rooms on an out-of-network basis, comparable discounts
`
`would not be appropriate, let alone steeper ones.
`
`41.
`
`For example, for nearly five and a half years prior to January 1, 2019, Cigna had
`
`agreed to reimburse the Hospitals at 75% of the Hospitals’ billed charges when any of its members
`
`utilized the Hospitals on an out-of-network basis. Likewise, it is also common for payors, when
`
`their members access out-of-network services, to reimburse claims at similarly small discounts
`
`through “leased” or “rental” networks, such as MultiPlan.4
`
`
`4 Entities such as MultiPlan contract with providers to facilitate payment for services when the
`providers do not participate in the patient’s health plan and “lease” or “rent” their discounted rates
`to those health plans for a fee. Because the leased network provides certain benefits, such as
`
`
`
`10
`
`

`

`Case 2:21-cv-02308 Document 1 Filed 05/13/21 Page 11 of 25 PageID 11
`
`42.
`
`Despite the absence of any such agreement here, Cigna has systematically
`
`employed one or more unilaterally determined methodologies to calculate the rates at which it will
`
`reimburse out-of-network claims for emergency services, resulting in payments to the Hospitals
`
`well below the fair value of said services. In fact, Cigna’s methodologies resulted in even greater
`
`discounts than Cigna would have been entitled to under the contracts where the Hospitals were
`
`participating with Cigna, paying (on average) nearly 50% less than the already discounted rates,
`
`despite the Hospitals not receiving the substantial benefits of in-network participation for which
`
`they bargained in exchange for those discounts. Cigna’s conduct is wholly at odds with commonly
`
`understood industry principles and turns the widely recognized and accepted “managed care
`
`bargain” on its head.
`
`43.
`
`Cigna’s payment strategy for out-of-network providers is motivated by its desire to
`
`maximize profits. For example, without limitation, by underpaying providers for out-of-network
`
`services, Cigna: 1) reduces its expenses to provide required coverage to Cigna Members; 2) gains
`
`leverage in its negotiations with providers to become participating providers on terms more
`
`beneficial to Cigna5; and 3) improves its ability to market its services as an administrator of self-
`
`funded plans by creating an artifice that it is reducing health care costs through unilaterally
`
`established, unlawfully low provider payments.
`
`
`payment certainty, but not others, such as steered volume or elective services, the discounts
`accepted by the providers are substantially less than where the provider participates “in-network”
`in a health plan.
`
` 5
`
` As noted, Cigna paid the Hospitals for the Non-Participating Claims nearly 50% less than what
`it would have paid them under the contracts where the Hospitals are participating providers and
`receive the substantial benefits of in-network participation status in exchange for their agreement
`to accept discounted reimbursement amounts.
`
`
`
`11
`
`

`

`Case 2:21-cv-02308 Document 1 Filed 05/13/21 Page 12 of 25 PageID 12
`
`44.
`
`At all material times, Cigna has paid (on behalf of its fully insured plans and on
`
`behalf of the Self-Funded Plans it administers) for the emergency medical care that the Hospitals
`
`provided to Cigna Members, but at rates less than the reasonable value of the services, as measured
`
`by the community where they were performed.
`
`45.
`
`Cigna’s underpayments to the Hospitals continue to accrue and, as a result, the
`
`damages the Hospitals are incurring continue to increase.
`
`Federal and Tennessee Law Mandate That the Hospitals
`Provide Emergency Medical Care to Cigna Members
`
`
`46.
`
`Federal law obligates emergency medical providers—like the Hospitals—to
`
`provide treatment to patients who present themselves at emergency departments.
`
`47.
`
`Under the Emergency Medical Treatment and Labor Act (“EMTALA”), 42 U.S.C.
`
`§§ 1395dd(a)-(b), (d), (h), hospitals have a duty to “provide for an appropriate medical screening
`
`examination” when an individual comes to the emergency department and, if “the individual has
`
`an emergency medical condition,” to “stabilize the medical condition” without inquiry into “the
`
`individual’s method of payment or insurance status.” 42 U.S.C. §§ 1395(a)-(b), (h); see also Tenn.
`
`Comp. R. & Regs. 1200-08-01-.07(5) (same).
`
`48.
`
`Hospitals are subject to civil liability for a violation of EMTALA’s mandates. See
`
`42 U.S.C. § 1395dd(d)(2)(A).
`
`49.
`
`Thus, federal and Tennessee law require that the Hospitals provide treatment to any
`
`individual—including Cigna Members—who presents at their emergency department, regardless
`
`of the person’s insurance coverage or ability to pay for the medical care.
`
`
`
`
`
`
`
`
`
`12
`
`

`

`Case 2:21-cv-02308 Document 1 Filed 05/13/21 Page 13 of 25 PageID 13
`
`Federal and Tennessee Law Mandate That Cigna Provide Coverage for
`Emergency Medical Care to Cigna Members by Non-Participating Providers
`
`
`50.
`
`Both federal and Tennessee law obligate Cigna and the Self-Funded Plans to
`
`provide coverage for emergency medical care to Cigna Members regardless of whether prior
`
`authorization was obtained and regardless of whether the provider participates in Cigna’s provider
`
`network.
`
`51.
`
`Under governing federal regulations, “A plan or issuer … must provide coverage
`
`for emergency services … (ii) [w]ithout regard to whether the health care provider furnishing the
`
`emergency services is a participating network provider with respect to the services[.]” 45 C.F.R.§
`
`147.138(b)(2).
`
`52.
`
`Likewise, Tennessee law provides, “A health benefit plan shall not deny coverage
`
`for emergency services if the symptoms presented by an enrollee of a health benefit plan and
`
`recorded by the attending provider indicate that an emergency medical condition could exist,
`
`regardless of whether prior authorization was obtained to provide those services and regardless of
`
`whether the provider furnishing the services has a contractual agreement with the health benefit
`
`plan for the provision of the services to the enrollee.” Tenn. Code § 56-7-2355.
`
`53. Moreover, upon information and belief, one of more of the benefit plans issued or
`
`administered by Cigna provide that, with respect to emergency services, Cigna (on behalf of its
`
`fully insured plans and on behalf of the Self-Funded Plans it administers) will hold the Cigna
`
`Member harmless for costs in excess of the in-network cost-share obligations.
`
`The Law and Equity Must Intervene Here to Prevent an Injustice
`
`54.
`
`To comply with their ethical and legal obligations under federal and Tennessee law,
`
`the Hospitals provided, and continue to provide, medically necessary emergency medical care to
`
`Cigna Members in good faith.
`
`
`
`13
`
`

`

`Case 2:21-cv-02308 Document 1 Filed 05/13/21 Page 14 of 25 PageID 14
`
`55.
`
`Cigna and the Self-Funded Plans could not lawfully prevent Cigna Members from
`
`seeking emergency medical care from the Hospitals and were obligated to provide coverage for
`
`emergency medical care rendered by the Hospitals to Cigna Members regardless of whether prior
`
`authorization was obtained and regardless of whether the Hospitals participated in Cigna’s
`
`provider network. Indeed, Cigna knew and expected that Cigna Members would seek and obtain
`
`emergency medical care at the Hospitals, despite the Hospitals’ status as non-participating
`
`providers for the health insurance plans and products at issue in this lawsuit.
`
`56.
`
`57.
`
`As such, the law, in effect, compelled the parties to do business with each other.
`
`Cigna (on behalf of its fully insured plans and on behalf of the Self-Funded Plans
`
`it administers) is obligated to reimburse the Hospitals for the reasonable value of the services the
`
`Hospitals provided, accounting for the Cigna Members’ liability for any pertinent copayments,
`
`deductible and coinsurance amounts as permitted under 45 C.F.R. § 147.138(b)(3) and Tenn. Code.
`
`§ 56-7-2355(b)(4).
`
`58.
`
`Furthermore, the emergency medical care that the Hospitals provide to Cigna
`
`Members materially and directly benefits Cigna and the Self-Funded Plans that Cigna administers.
`
`The Hospitals’ provision of emergency medical care to Cigna Members benefited Cigna and the
`
`Self-Funded Plans by discharging their federal and Tennessee legal obligations to provide
`
`coverage for emergency services to the Cigna Members and their contractual obligations to the
`
`Cigna Members to provide coverage for emergency services.
`
`59.
`
`The benefit that Cigna (on behalf of its fully insured plans and the Self-Funded
`
`Plans it administers) receives from the Hospitals’ emergency medical care therefore is significant.
`
`In exchange for premiums and other compensation, Cigna (on behalf of its fully insured plans and
`
`
`
`14
`
`

`

`Case 2:21-cv-02308 Document 1 Filed 05/13/21 Page 15 of 25 PageID 15
`
`the Self-Funded Plans it administers) assumes a duty to provide coverage to its members for
`
`emergency medical care. Satisfying this “core obligation” is a material benefit in Cigna’s favor.
`
`60.
`
`By fulfilling the obligations of Cigna (and the Self-Funded Plans it administers)
`
`under federal and Tennessee law and under the respective contracts with Cigna Members to
`
`provide emergency services, Cigna realized an advantage from the Hospitals’ services that has a
`
`measurable value. For example, Cigna was able to avoid the risk of incurring certain expenses or
`
`losses, including without limitation: 1) if the Hospitals had not fulfilled Cigna’s obligations to
`
`provide for emergency services, Cigna may have been exposed to federal or state regulatory action,
`
`fines or civil penalties; 2) if the Hospitals had not rendered timely and necessary medical care to
`
`Cigna Members, Cigna may have been exposed to claims by Cigna Members that they had been
`
`denied benefits under their plans; 3) if the Hospitals had not rendered timely and necessary medical
`
`care, Cigna may have been exposed to costs to provide additional care for worsening medical
`
`conditions; 4) upon information and belief, under one or more of the contracts with Cigna
`
`Members, Cigna had agreed to hold the Cigna Members harmless for the costs of any emergency
`
`services in excess of what the Cigna Members would have had to pay for the same services from
`
`a participating provider; and 5) upon information and belief, under one or more of the contracts
`
`with Cigna Members, Cigna had agreed to reimburse healthcare providers who render out-of-
`
`network emergency care to Cigna’s Members at the usual and customary provider charges of such
`
`emergency services in the area where the services were rendered.
`
`61.
`
`The Hospitals billed Cigna for the Non-Participating Claims arising from the
`
`treatment of Cigna Members. The Hospitals did so in reliance on Cigna’s implied agreement to
`
`reimburse them at the reasonable value for the emergency medical care rendered.
`
`
`
`15
`
`

`

`Case 2:21-cv-02308 Document 1 Filed 05/13/21 Page 16 of 25 PageID 16
`
`62.
`
`Cigna knew that the Hospitals expected payment for the emergency medical care
`
`they provided: Cigna, on behalf of its fully insured plans and on behalf of the Self-Funded Plans
`
`it administers, adjudicated the Non-Participating Claims as covered and medically necessary and,
`
`more to the point, consistently paid them. Cigna’s payments, however, were well below the
`
`reasonable value of the services rendered, as measured by the community where they were
`
`performed.
`
`63.
`
`As an example of a rate for out-of-network services negotiated at arms’ length
`
`between a willing buyer and a willing seller, for the five and a half years prior to January 1, 2019,
`
`Cigna had an agreement with the Hospitals to reimburse them for out-of-network services at 75%
`
`of the Hospitals’ billed charges.6 The lower reimbursement rates unilaterally determined and paid
`
`by Cigna for out-of-network services rendered by the Hospitals on and after January 1, 2019 that
`
`give rise to the Non-Participating Claims, however, are substantially below the 75% of billed
`
`charges rate for out-of-network services that Cigna had agreed to pay the Hospitals during the five
`
`and a half years immediately before January 1, 2019 and was a fair and reasonable rate for such
`
`services.
`
`64.
`
`The lower reimbursement rates unilaterally determined and paid by Cigna are
`
`neither reasonable nor sufficient to compensate the Hospitals for the emergency medical care they
`
`provide to Cigna Members. Indeed, Cigna’s unilaterally determined and paid rates are (on average)
`
`nearly 50% lower than the rates payable under plans in which the Hospitals are participating
`
`providers (and without the Hospitals receiving the substantial benefits associated with network
`
`participation, which are the basis for the Hospitals agreeing to those discounts).
`
`
`6 This rate is indicative of the fact that the Hospitals had contractually secured certain benefits,
`such as payment certainty, but received none of the many other substantial benefits of in-network
`participation, such as steered volume of patients and authorization to provide elective services.
`
`
`
`16
`
`

`

`Case 2:21-cv-02308 Document 1 Filed 05/13/21 Page 17 of 25 PageID 17
`
`65.
`
`Cigna’s refusal to pay the Hospitals the reasonable value of the emergency medical
`
`care provided to Cigna Members generates an enormous economic windfall for Cigna and the Self-
`
`Funded Plans it administers and has caused, and continues to cause, the Hospitals to suffer
`
`damages.
`
`66. Moreover, because the Hospitals render emergent care to Cigna Members on an
`
`ongoing basis,