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Cardionet, Inc. v. CIGNA Health Corp.

United States District Court, Third Circuit

May 24, 2013

CARDIONET, INC., et al., Plaintiffs,
v.
CIGNA HEALTH CORP., Defendant.

MEMORANDUM

EDUARDO C. ROBRENO, J.

I.BACKGROUND[1]

Plaintiffs CardioNet, Inc. (“CardioNet”) and LifeWatch Services, Inc. (“LifeWatch”) are the leading suppliers of outpatient cardiac telemetry (“OCT”) services. Compl. ¶ 1. OCT is a real-time, physician-prescribed, cardiac event monitoring service for patients experiencing symptoms of atrial fibrillation that evade detection through the use of shorter term monitoring technology. Compl. ¶¶ 20-26. Defendant, CIGNA Health Corporation (“CIGNA”), issued numerous coverage policies between 2007 and 2011 affirming that “there is sufficient evidence in the published peer reviewed literature supporting the use of [OCT services]” for diagnosing dangerous arrhythmias that “pose a significant health risk” and which escape early detection through other cardiac diagnostic tests. Compl. ¶¶ 56-60.

Plaintiffs each became CIGNA in-network providers by entering into an Administrative Services Agreement (“ASA”) with CIGNA in 2007. Compl. ¶¶ 46-47. Each ASA includes a negotiated rate for each Plaintiff’s OCT services. Pl.’s Resp. 2, ECF No. 9. Plaintiffs are not, however, automatically entitled under the terms of the ASAs to be paid for OCT services furnished to CIGNA patients. Id. Instead, Plaintiffs’ services are reimbursable only when they are considered “Covered Services, ” which are defined as: “Those health care services for which a Participant is entitled to coverage under the terms and conditions of the Participants Benefit Plan.” Id. (citing ASA § 1.5).

Effective October 2012, Defendant declared, through the issuance of a 2012 Cardiac Event Monitoring Policy (the “2012 CEM Policy”) that OCT services would no longer be covered because they were “experimental, investigational and unproven” (“EIU”). Compl. ¶¶ 67, 74, 75. The 2012 CEM Policy stated that CIGNA’S new policy against OCT coverage is superseded when the governing employee health benefit plan administered by CIGNA contains a less restrictive coverage provision. Id. ¶¶ 86-87. For example, some plans only treat services that are not FDA approved or are used strictly for clinical trial purposes as EIU. Id.

After refusing Plaintiffs’ independent requests to reconsider the pre-announced change in its OCT coverage policy, CIGNA disseminated an electronic bulletin, styled as an August 2012 Physicians Update on Cardiac Event Devices (the “Physician’s Update”) to hundreds of thousands of physicians who participate in CIGNA’s provider network and who order, or are in a position to order, Plaintiffs’ services. Id. ¶¶ 78, 80-81. The Physician’s Update stated without qualification that OCT “is considered EIU” and pronounced that CIGNA would never cover OCT “for any indication.” Id. ¶¶ 80-81. Plaintiffs allege that as a result of this pronouncement and the 2012 CEM Policy, OCT orders for CIGNA patients have virtually ceased, and orders for non-CIGNA patients have also been adversely effected. Pl.’s Resp. 3.

To challenge CIGNA’s actions, Plaintiffs filed this suit “on their own behalf and as assignees of the rights and claims of patients.” Compl. 1. The first four counts of the Complaint comprise derivative claims that seek to enforce the rights to coverage of OCT of patients from whom Plaintiffs obtained assignments of rights and legal claims. Plaintiffs seek compensatory and prospective equitable relief under Section 502(a) of the Employee Retirement Income Security Act (“ERISA”) on behalf of Plan Participants in Counts I and II. Plaintiffs also have sought injunctive relief against CIGNA as a plan fiduciary on behalf of Plan Participants under Count III. Plaintiffs assert derivative common law, breach of contract claims (under Count IV) for patients not enrolled in ERISA plans (for example, patients who are employed by state governments or instrumentalities). Plaintiffs also separately advance direct challenges to CIGNA’s dissemination of misleading and injurious statements about their products and services through common law and statutory claims for tortious interference with Plaintiffs’ relations with ordering physicians, violation of § 43(a) of the Lanham Act, and trade disparagement (Counts V, VI, and VII respectively).

Plaintiffs seek the following relief:

• An order requiring Defendant to pay/reimburse Plaintiffs for OCT services provided since the implementation of, and derived or not ordered as a result of the 2012 CEM Policy;
• An order enjoining CIGNA from applying the 2012 CEM Policy as a basis for denying coverage for OCT and requiring CIGNA to withdraw and rescind the 2012 CEM Policy;
• An order declaring that CIGNA shall cover OCT for the above-noted assignees and for all other participants of CIGNA’s benefit plans whom OCT services are found to be medically necessary under the terms of the 2011 CEM Policy;
• An order requiring CIGNA to withdraw and rescind the Physician Updates and any other similar communications to third parties in which CIGNA has referred to OCT as experimental, investigational or unproven;
• An order requiring CIGNA to send corrective notices to all persons to whom it distributed the ...

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