Following nearly two years of litigation, Cigna Health and Life Insurance Company and the named plaintiffs in Hecht v. Cigna Health and Life Insurance Co., Case No. 1:24-cv-05926 (N.D. Ill.) have announced a class action settlement in principle.
The plaintiffs — participants in an employer-sponsored health plan administered by Cigna — alleged that inaccuracies in Cigna’s online provider directory created a “ghost network,” leading patients to unwittingly obtain care from providers later deemed “out-of-network,” and to incur thousands of dollars in balance-billed charges as a result. The suit claimed that Cigna’s failure to resolve contradictory network status information breached Cigna’s fiduciary duties of care and loyalty under the Employee Retirement Income Security Act of 1974 (ERISA), and also violated ERISA by breaching terms and conditions of the plaintiffs’ benefits plan.
Back in May, the court dismissed some causes of action but found sufficient allegations for the plaintiffs to proceed with the ERISA breach of fiduciary duty claim. On August 4, the parties reached a mediated agreement and, on August 25, jointly advised the court that they will seek preliminary approval of the deal by September 19. That deadline was recently extended, and the motion for preliminary approval will now be presented on October 3. While final settlement terms have not yet been filed, the case highlights the potential for financial, operational, and reputational exposure for not just payers of health care services, but also medical providers when payer records and provider billing systems diverge on the provider’s network status.
Why Providers Should Care
Financial and Operational Risk From Competing Network Determinations
- Even if a provider accurately reflects its contracting status internally, patients may rely on a plan’s directory to determine whether a provider is “in-network.”
- If a provider is not accurately listed in a network directory, that provider will not realize one potential benefit of network participation (that directory listing leading to new patients or care).
- Directory errors could also lead to reimbursement disputes and unanticipated patient balance bills (as was the case here).
- Litigation (or arbitration) over conflicting network status records could tie up hundreds of individual accounts, delaying revenue to the provider and resulting in increased costs.
No Suprises Act Compliance Obligations
- The No Surprises Act requires plan directories to be verified every 90 days and updated within two business days of notice of a change.
- Plans, not patients, are liable for any increase in cost-sharing when their directory erroneously lists a provider as in-network.
- Nevertheless, providers can still be entangled in disputes, especially when directory errors lead to reduced reimbursement and balance bills.
Action Items for Providers
Audit Contract Status and Directory Listings
Confirm that each payer’s directory correctly identifies your practice locations, specialties, and accepting-new-patient status and document screenshots of verification.
Evaluate Insurance Verification Processes
Ensure the procedures for verification of insurance benefits are robust so that any disagreement about network status is flagged early on.
Review Relevant Contract Provisions
Evaluate your payer agreements’ dispute resolution terms, whether the agreements address directory lawsuits, and whether that gives rise to any indemnification obligations.
Develop Patient-Facing Communications
Implement standard communications that explain next steps when a payer’s explanation of benefits conflicts with your contract records, and avoid informal concessions that could undermine contractual rights.
Looking Ahead
The Hecht class action settlement underscores the litigation exposure that arises when provider directories are inaccurate or stale. While plan participants may be afforded some relief under federal law, providers may bear the brunt of disputes over underpaid claims arising from directory errors. For providers, a comprehensive, proactive directory verification and management strategy — coupled with clear steps for resolution of any discrepancies — remains the best defense against future “ghost network” claims.
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