Conn. Gen. Life Ins. Co. v. Humble Surgical Hosp., LLC – March 2015 (Summary)

FINANCIAL CONFLICT OF INTEREST AND ERISA

Conn. Gen. Life Ins. Co. v. Humble Surgical Hosp., LLC, Civil Action No. 4:13-CV-3291 (S.D. Tex. Mar. 24, 2015)

The United States District Court for the Southern District of Texas dismissed Cigna’s Employment Retirement Income Security Act (“ERISA”) claim brought against a five-bed surgical hospital, holding that Cigna had failed to establish that it has standing to sue under ERISA. Cigna alleged that defendant, a surgical hospital, engaged in fraudulent billing practices by only charging Cigna’s policyholders in-network rates, while billing the remainder of the total amount to Cigna at its higher, out-of-network rates. Cigna also alleged that the surgical hospital paid referral fees to physicians, some of whom were owners of the surgical hospital.

Cigna asserted state law claims for common law fraud, negligent misrepresentation and unjust enrichment. Cigna also sought injunctive relief that would require the surgical hospital to disclose its referral arrangements with physicians and declarative judgment that the surgical hospital’s billing practices violated Texas law. Cigna also alleged that it was a fiduciary under ERISA and requested the court to order the hospital to return the overpayments.

The court ruled that ERISA pre-empted all state claims arising from Cigna’s self-funded and employee benefit plans. The court then ruled that Cigna failed to allege sufficient facts to show that it had standing to sue under ERISA, ruling that Cigna’s assertion that it was a fiduciary under ERISA was unsubstantiated and conclusory.