Third Circuit Revives Hospitals’ ERISA Underpayment Claims Against Cigna Under MRC-1 and MRC-2 Plans

In Hudson Hospital OPCO, LLC v. Cigna Health & Life Insurance Co., No. 24-2830, 2026 WL 2057076 (3d Cir. July 16, 2026), three New Jersey hospitals appealed the dismissal of claims they brought against Cigna Health and Life Insurance Company and Connecticut General Life Insurance Company under ERISA, alleging that the insurers underpaid them for out-of-network healthcare services provided to Cigna subscribers from March 2016 through May 2021. Plaintiffs claimed the underpayments violated the reimbursement terms of the health insurance plans, which required Cigna to calculate out-of-network reimbursement for elective treatments under one of three methodologies: MRC-1, MRC-2, or R&C. The District Court for the District of New Jersey, Judge Jamel K. Semper, dismissed the second amended complaint with prejudice, concluding that Plaintiffs failed to plead that Cigna did not pay the lesser of their normal charges or the plan-established rates, dismissed the derivative fiduciary-duty claim, and declined supplemental jurisdiction over the state law claims. The Third Circuit affirmed in part, vacated in part, and remanded.

The court first addressed standing in light of anti-assignment provisions Cigna identified in at least 36 of the 114 plans. As to 29 plans containing both a general anti-assignment provision and a separate provision authorizing subscribers to direct payment to a provider, the court agreed with Plaintiffs that the specific payment carve-out qualified the general anti-assignment language. Applying the federal common law of contract and the principle that specific provisions control over general ones, the court held that subscribers’ invocation of the carve-out to assign the right to payment carried with it the right to sue for non-payment, so the anti-assignment provisions in those plans did not bar suit. As to seven other plans containing anti-assignment provisions without a payment carve-out, the court directed the District Court to consider standing in the first instance on remand.

Turning to the merits of the benefits claim under 29 U.S.C. § 1132(a)(1)(B), the court held that the District Court failed to construe the allegations in the light most favorable to Plaintiffs. The District Court had rejected Plaintiffs’ allegation that their Chargemaster rates constituted their normal charges, reasoning that the same figures had been labeled “Total Charges” in an earlier version of the complaint and therefore represented billed charges rather than normal charges. The Third Circuit disagreed, holding that at the motion-to-dismiss stage it was obligated to accept as true Plaintiffs’ allegations that they billed Cigna their normal charges, corroborated by their publicly available Chargemasters, along with their allegations that the MRC-1 and MRC-2 plans used the FAIR Health database and that Cigna had not developed the Medicare-based schedule described in the MRC-2 method. Accepting those allegations, the court concluded that Plaintiffs adequately alleged that the MRC-1 and MRC-2 methods required reimbursement at the lesser of their normal charges or the 80th to 90th percentile of the FAIR Health database, that their normal charges did not exceed that percentile, and that they were reimbursed below the required amounts. Plaintiffs therefore stated a claim as to the MRC-1 and MRC-2 plans.

The court reached a different conclusion as to the R&C plans. Plaintiffs conceded that the reimbursement language varied across plans using the R&C method, and unlike their MRC-1 and MRC-2 allegations, they did not allege which percentile of the FAIR Health database Cigna used to set R&C reimbursement rates. The court noted that the R&C language in some plans afforded Cigna substantial discretion, treating usual charges and prevailing fees as only two of various factors Cigna could consider. Given the variation in plan language and operation, the court held it could not reasonably infer that Plaintiffs were routinely underpaid on R&C claims and affirmed the dismissal of the benefits claim as to those plans.

Finally, the court affirmed the dismissal of the fiduciary-duty claim under 29 U.S.C. § 1132(a)(3) for lack of standing. Plaintiffs alleged that Cigna’s “cost-containment program,” under which Cigna and its business partners collected fees calculated as a percentage of the “savings” achieved by underpaying claims, amounted to self-dealing and a breach of the duties of loyalty and due care, and they sought disgorgement of those fees. Applying Thole v. U.S. Bank N.A. and Knudsen v. MetLife Group, Inc., the court held that Plaintiffs failed to establish a concrete injury because the complaint did not show that they had a right to the cost-containment fees, which Cigna paid itself pursuant to agreements with the plans, or that they were entitled to be paid more than the amounts they negotiated with Cigna. Because it resolved the claim on standing grounds, the court did not reach Cigna’s argument that it was not a plan fiduciary. The court affirmed in part, vacated in part, and remanded for further proceedings.