Cigna, as both an insurer and a third-party administrator of employer sponsored health plans, did not pay the out-of-network coinsurance percentage for claims based on the out-of-network provider’s charged amount in cases where the provider did not charge participants the plan’s full coinsurance percentage. Cigna based its denials on the plans’ exclusion of “charges for which the participant is not obligated to pay or for which the participant is not billed.” North Cypress Medical Center, an out-of-network hospital in Texas, sued on behalf of participants to obtain the full out-of-network coinsurance percentage based on the provider’s full charged amount. Although the U.S. Court of Appeals for the Fifth Circuit did not address the claim on its merits, the Court remanded the claim to the district court for full consideration as to whether Cigna had discretion to interpret the exclusion in this manner. Issues for the district court to consider include whether Cigna had a conflict of interest, the internal consistency of the plans, the factual background for the determination, and any inferences of lack of good faith. This type of litigation could potentially be avoided by including certain provisions in the plan.

N. Cypress Med. Ctr. Operating Co. v. CIGNA Healthcare, No. 12-20695 (5th Cir. Mar. 10, 2015).