Cigna Administered ERISA Plan Sued for Embezzlement in OON Claims Disputes - Demystifies

November 01, 2015 (PRLEAP.COM) Business News
Hanover Park, IL (PRLeap) November 1, 2015 On Oct. 29, 2015, in southern district of Texas Federal Court, a Cigna administered self-insured ERISA plan, CB&I and its Plan Administrator, Dennis Fox, were sued by an out-of-network (OON) surgical center, True View Surgery Center One, for alleged ERISA plan assets embezzlements, deceptively concealed with the alleged "fake PPO (CO) discounts" and "fee forgiveness protocol scam". This new type of ERISA health Plan lawsuit, by an OON healthcare provider for alleged plan assets embezzlement by the ERISA plan's third party claim administrator (TPA), was just filed eight (8) days after a self-insured plan filed a similar lawsuit, FAC on Oct. 21, 2015 and initially on Aug. 27, 2013, against the plan's TPA for allegedly the similar plan assets conversion, in the OON claims administration claims between the ERISA plan and TPA.

On Oct. 30, 2015, announced a new division of its ERISA litigation support and/or prevention program, in order to (A) closely track this type of unprecedented but most dramatic emerging trend in ERISA healthcare litigation in today evolving managed care market: (1) new litigation allegations of the plan assets embezzlement by plan sponsors and plan administrators, healthcare providers and federal regulatory and enforcement agencies; (2) Managed care TPA litigation defense strategies and trial evidence; (3) Court decisions and alternative resolutions to this new trend in the alleged conflict in ERISA prohibited transaction against the plan TPA's for managed care costs containment and saving; (B) demystify these new lawsuits, for plan sponsors and providers, the early and ultimate impact on all out-of-network claims dispute. exclusively reviews public information in court documents and updates it clients with assessment and strategies.

"In the past 5 years, has been closely watching the decisions from the Supreme Court and federal appeals courts on ERISA prohibited self-dealing against the ERISA plan TPA's for managed care savings. These new ERISA embezzlement cases are just the initial impact of the court's Hi-Lex decisions," says Dr. Jin Zhou, president of, a national expert on ERISA compliance and appeals.

The Court Case info:

True View Surgery Center One L.P., v. Chicago Bridge An Iron Medical Plan, Chicago Bridge And Iron Company, And Dennis Fox, Case #: 3:15-CV-00310, filed on Oct. 29, 2015, in the United States District Court For The Southern District of Texas.

UNITED TEAMSTER FUND, et al v. Magnacare Administrative Services, LLC et al, Case 1:13-CV-06062-WHP-FM, First Amended Complaint (FAC), filed on Oct. 29, 2015, original Complaint, filed on august 27, 2013, in United States District Court Southern District Of New York.

On Oct 29, 2015, in a lawsuit filed by an OON ASC against Cigna administered ERISA plan, the Plaintiff alleged in part:

"Specifically, in spite of the glaring conflict of interest and inherent breach of fiduciary duties, Defendants agreed to an unlawful compensation structure that financially rewards Cigna for wrongfully denying and underpaying benefits claims. Under this backdrop, together Defendants and Cigna concocted an intricate scheme to transfer and embezzle plan funds. Transfers are first concealed by processing out-of-network claims under a fabricated Preferred Provider Organization (PPO) "contractual obligation," even though Defendants and Cigna are fully aware that no such contract exists. Then, Defendants and Cigna knowingly implemented a system to willfully and wrongfully refuse payments to the out-of-network provider under a sham "fee-forgiveness" protocol. As a result of the wrongful claims denials, the transferred plan funds are ultimately misappropriated by Cigna, who then fraudulently pays itself with the plan funds, falsely declaring the embezzled funds as compensation generated through managed care and out-of-network cost containment "savings," when in truth the claims were never paid and the plan beneficiaries were left exposed to personal liability for their unpaid medical bills." according to the court documents.

On Oct 21, 2015, in a lawsuit filed by an ERISA plan against an ERISA plan TPA, the Plaintiff alleged in part:

"MagnaCare represented to Plaintiffs in a written contract between the parties that providers of diagnostic laboratory and ancillary services had "accepted" a "fee schedule" which included a "management fee" for MagnaCare. In fact, the providers had never "accepted' a fee schedule containing a "management foe" for MagnaCare. Rather, the providers had agreed to a fee schedule, which was a fraction of the amounts collected by MagnaCare from Plaintiffs. MagnaCare - without disclosure to Plaintiffs or the providers - simply misappropriated the difference between what Plaintiffs paid MagnaCare and what MagnaCare negotiated to pay the providers." according to the court documents.

According to Dr. Zhou, on Oct. 20, 2014, the U.S. Supreme denied all appeals on a BCBSM's $6.1 million fraud judgment for a self-insured ERISA plan by the U.S. Court of Appeals for the Six Circuit, upholding the decision by the District Court for the Eastern District of Michigan.

On May 14, 2014, a federal appeals court (Sixth Cir. 2014) upheld a district court's $6.1 million decision for Hi-Lex, a self-insured ERISA plan against BCBSM for violating ERISA in prohibited transactions and fiduciary fraud, according to the court documents.
Hi-Lex Controls, Inc. v. Blue Cross Blue Shield of Michigan, ((SC Case #. 14-168, 6th Cir. Case #: 13-1773, 13-1859).

To find out more about PPACA Claims and Appeals Compliance Services from

Located in a Chicago suburb in Illinois, for over 15 years, is the only ERISA & PPACA consulting, publishing and website resource for healthcare providers in the country. offers free webinars, basic and advanced educational seminars and on-site claims specialist certification programs for doctors, hospitals and commercial companies, as well as numerous pending national ERISA class action litigation support. Dr. Jin Zhou is regarded as the industry "Godfather of ERISA claims" for healthcare providers.

For any questions, please contact Dr. Jin Zhou, president of, at 630-808-7237.

Share Article