Psychologists Get Nearly $2.2 Million in CIGNA Settlement Payouts

by Legal and Regulatory Affairs and Communications Staff

October 11, 2005 — More than 4,000 psychologists received almost $2.2 million in August from a settlement with CIGNA, part of a nationwide class action lawsuit involving 12 of the largest managed care organizations (MCOs) in the United States. CIGNA also agreed in the settlement to make numerous policy changes for the benefit of health professionals who serve CIGNA patients.

The class action litigation in Florida by psychologists and other nonphysician health professionals alleges that the defendant companies conspired to reduce and delay payments to providers. According to APA Executive Director for Professional Practice Russ Newman, PhD, JD, settlements with other of the defendants may be possible prior to going to trial.

The shares paid by CIGNA to eligible claimants were weighted based on the estimated amount of services provided to CIGNA subscribers. The base amount was $212.13, and the average payout was $540. But anecdotal reports indicate that some practices received considerably higher sums. For example, one psychology group practice in northeastern Ohio received a check for nearly $10,000.

The total fund was paid to a class of nonphysicians who over a period of nearly 15 years ending in December 2004 provided services to CIGNA subscribers or subscribers of the other managed care defendants in the class action lawsuit. Eligible psychologists had a May 27, 2005 deadline for filing a claim.

The APA Practice Organization became involved in the litigation and settlement negotiations with CIGNA in order to press the profession’s particular concerns. For example, the Practice Organization was successful in ensuring that psychologists would not have “no-cause termination” clauses in their provider contracts.

In commenting on the CIGNA settlement, APA member Nan Klein, PhD, observed that practitioners can feel helpless in recognizing egregious practices by some managed care organizations while thinking there’s not much they as individuals can do about the situation. “As a solo practitioner, you can’t doggedly pursue righting the wrongs,” she said. “It’s gratifying to know that our national organization is [challenging] these managed care companies.” Dr. Klein said that, beyond the victory for psychology, it was nice to get a tangible benefit in the form of a CIGNA settlement payout check.

For some APA members, the payout amount seemed to surprise them. John Corrigan, PhD, of Columbus, Ohio reported that his group received a “generous check that was quite a bit more” than he expected.

Dan Abrahamson, PhD, of South Windsor, Conn., said that the CIGNA settlement payout of several thousand dollars to his group practice initially struck him as substantial, compared with the pittance he had received from other class action settlements. Then he factored in the aggravation of dealing with the MCO.

“When I think about all the grief that CIGNA has caused us over many years, the [amount of the] settlement check didn’t seem like that much,” said Abrahamson. “But it did feel like some vindication for all the hassles and indignation.”

The gains for psychologists from the CIGNA settlement extend beyond the distribution of funds to eligible claimants. CIGNA also is making numerous policy improvements to benefit health professionals who treat CIGNA subscribers. The policy changes fill nearly half of the 108-page text of the CIGNA settlement agreement, covering such topics as medical necessity, prompt payment of claims, recovery of “overpayments,” timely correction of provider listings, and greater transparency regarding the company’s policies and procedures.

The APA Practice Organization has created a summary document, "Policy changes in the CIGNA settlement," highlighting some of the policy changes that are most relevant for practicing psychologists. We also are working with state psychological association leaders on monitoring CIGNA’s compliance with the policy provisions.

If, after reviewing the summary of policy changes, you believe that CIGNA is not complying with its settlement obligations, please contact the Legal & Regulatory Affairs office of the APA Practice Organization at 202-336-5886.

The Florida lawsuit that includes the CIGNA settlement is part of a continuing initiative by organized psychology to hold managed care companies accountable for actions that harm patients and practitioners. The legal strategy has also resulted in successful settlements of lawsuits in which APA partnered with the Virginia Academy of Clinical Psychologists, the New Jersey Psychological Association and the California Psychological Association.

We will continue to keep licensed APA members informed of pertinent developments in the Florida class action lawsuit through the PracticeUpdate E-Newsletter and APApractice.org.