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Cigna Claims Suit Un-Settled

Federal judge in Miami blocks settlement in Illinois case involving claims.

The settlement of the Kaiser vs. Cigna claims-slicing lawsuit was blocked last month by a federal judge in Miami who is hearing a larger class-action case involving Cigna and other carriers that have been accused of using software to down-code claims, allegedly saving millions in claims payments.

Cigna Corp. ($91.6 billion in assets, Philadelphia) had agreed to a settlement that doctors' groups estimate will have Cigna pay as much as $200 million to physicians who were reportedly shortchanged by the carrier's computerized payment systems. Although Cigna indicated the $200 million estimate was overestimated, the insurer did announce that it expected to take a 2002 fourth-quarter after-tax charge of $50 million to $65 million that reflects insurance recoveries that Cigna expects toreceive.

Central to the suit was the charge that Cigna was improperly using software from McKesson Corp. (San Francisco), including CodeReview and ClaimsCheck, to unbundle and down-code claims.

Cigna will still be allowed to use the software, but the settlement requires that the insurer "post on its Web site additional explanations of its claim coding and other payment policies," and "establish an e-mail procedure that will enable providers to make inquiries regarding fee schedules."

"They can keep using it," says Mike Bruyere, an attorney with Lord Bissell Brook (Atlanta), about the software, "but they have to do a better job of giving advance notice of what the software will do."

Greg MacSweeney is editorial director of InformationWeek Financial Services, whose brands include Wall Street & Technology, Bank Systems & Technology, Advanced Trading, and Insurance & Technology. View Full Bio

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