Murphy’s Lawsuit Largely Tossed

Doctors can’t sue insurers under the CARES Act for withholding Covid-test reimbursements, a federal judge ruled — as part of a broader order that dismissed much of a lawsuit filed by pandemic ​“profiteer” Dr. Steven Murphy against the insurance giant Cigna.

U.S. District Court Judge Janet Bond Arterton handed down that 27-page decision Friday in the case Murphy Medical Associates LLC v. Cigna Health and Life Insurance Company.

Arterton granted part of Cigna’s motion to dismiss by agreeing to throw out six of the eight counts that Murphy included in his original November 2020 lawsuit. 

She did so on the same day that, in a separate legal filing in a separate but parallel federal case, Yale University lawyers added their voice to the chorus of critics decrying Murphy as a pandemic ​“profiteer.” (See more on that below.)

One of the counts that Arterton dismissed in her Friday order was Murphy’s claim that Cigna has violated two pandemic-era federal laws — the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security Act (“CARES”) Act — by failing to reimburse him for over $6 million worth of Covid-19 tests his medical practice performed on thousands of patients across Connecticut and New York in the early months of the pandemic, including in New Haven.

Cigna, meanwhile, has responded to the lawsuit by lambasting Murphy as a pandemic ​“profiteer” who has charged insurers upwards of $2,000 a pop for potentially unnecessary and unrelated tests that went well beyond checking for Covid-19. Patients from across Connecticut and New York have also spoken up time and time and time again over the past two years about how they visited government-backed testing sites run by Murphy to receive only a Covid-19 test – and later found out that Murphy had billed their insurance companies exorbitant amounts for a suite of unrequested and potentially unrelated medical treatment.

Arterton’s decision on Friday to dismiss the first count of Murphy’s lawsuit, however, had nothing to do with Cigna’s and his patients’ substantive concerns about the doctor’s allegedly fraudulent billing practices.

Rather, it had to do with whether or not Murphy as a healthcare provider has the right to take an insurance company to court under a section of the federal CARES Act that requires insurers to reimburse providers for the costs of Covid tests — but then doesn’t explicitly state whether or not those providers have a​“private right of action” if the insurers don’t hand over the money.

Arterton wound up siding with Cigna that the federal legislation does not explicitly grant healthcare providers such a legal right, and therefore the court should not read such a right into the law when Congress’s intent was not clear. (The judge did, however, decline to dismiss a separate count in which Murphy has accused Cigna of violating a separate federal healthcare law related to Covid-test reimbursements. See more below.)

Arterton’s decision has implications for healthcare providers well beyond Murphy looking for some kind of legal remedy when insurance companies don’t cover the costs of Covid-19 tests. 

Arterton’s order also appears to diverge from a recent Texas district court decision that did find that healthcare providers have a private right of action against insurance companies around Covid-test reimbursements under the very same section of the CARES Act under dispute in the Murphy case.

Click here to read about recent oral arguments in this case where Murphy’s and Cigna’s lawyers debated over whether or not a healthcare provider has such a right to sue under the federal legislation.

And click here to read Arterton’s Friday decision in full.

Judge: No Private Right Of Action; Pay Heed To "Congressional Intent"

How did Arterton arrive at her decision to dismiss the first count?

By going through the law itself as well as relevant judicial precedents to make her case that, if Congress does not clearly create or imply a private right of action on a particular matter, then a court shouldn’t create that right, even if it does make good policy sense.

First, to the law itself. The relevant section of the CARES Act reads, in part: ​“If the health plan or issuer does not have a negotiated rate with such provider, such plan or issuer shall reimburse the provider in an amount that equals the cash price for such service [of diagnostic testing] as listed by the provider on a public internet website, or such plan or issuer may negotiate a rate with such provider for less than such cash price.”

After quoting the law directly, Arterton wrote, ​“Plaintiff emphasizes the mandatory payment language of § 3202 of the CARES Act, arguing that Congress intended to afford ​‘out-of-network providers who furnish COVID testing’ with a private right to reimbursement. (Pl.’s Opp’n at 18 – 19.). With such a right, Plaintiff asserts that ‘[i]t is only logical to assume that if the group is denied the right granted to it by Congress, they will have a remedy.’ (Id.) However, this ​‘assumption’ does not suffice to show such Congressional intent.”

That issue of ​“Congressional intent” is of paramount importance, Arterton wrote, when determining whether or not a law that does not explicitly grant a right to sue nevertheless implies that such a right should exist.

Her Friday decision makes clear that Arterton was unconvinced by Murphy’s attorneys that Congress meant to imply that that is the case here.

“Plaintiff has not identified anything in the text or structure of the CARES Act which suggests that Congress intended to afford them with a privately enforceable remedy,” she wrote.

She then notes that Murphy’s legal team has argued that ​“Congress’s silence” on the private-right-of-action issue was merely a result of legislators rushing to pass a complicated and comprehensive package of legislation amidst an unprecedented global public health crisis.

“This argument, however, ignores the principle that ‘[i]f Congress has manifested no intent to provide a private right of action, [the Court] cannot create one,’ ” Arterton wrote. 

And she described how Murphy has argued that, without the right to sue insurance companies for withholding Covid-test reimbursements, he is left ​“remediless” because there is no other administrative enforcement provision on this issue spelled out in the law. 

“As such, [the plaintiff] argues that the legislation is ​‘worthless’ if there is not an implied right of action for medical providers. (Id. at 20:6.),” Arterton wrote. ​“While this argument may provide a good policy reason to create a private right of action, it does not provide an indication that Congress intended to create such a right. See Sandoval, 532 U.S. at 286 – 87.”

She also questioned whether or not Murphy really is ​“left remediless” under the law as currently written. ​“The parties’ briefing on the issue of whether the enforcement provisions cover Plaintiff’s claim does not address the statement in the Departments of Labor, Health and Human Services, and Treasury’s joint set of Frequently Asked Questions that the Departments would ​‘enforce the applicable provisions of the FFCRA (and the related provisions of the CARES Act), in conjunction with states, where applicable,’ ” she wrote.

“Mindful that the Supreme Court ​‘has increasingly discouraged the recognition of implied rights of actions without a clear indication of congressional intent,’ Duplan v. City of N.Y., 888 F.3d 612, 621 (2d Cir. 2018),” Arterton continued, ​“the Court concludes that neither § 6001 of the FFCRA nor § 3202 of the CARES Act contains a private right of action. Accordingly, Count One will be dismissed with prejudice for failure to state a claim upon which relief may be granted.”

But what about the recent Texas federal court decision that did find a private right of action for healthcare providers looking to collect Covid-test reimbursements from insurance companies?

That case is called Diagnostic Affiliates of Ne. Hous., LLC v. United Healthcare Servs. Inc. In a Jan. 18 decision, a federal district court judge found that healthcare providers do have an​“implied private right of action” under the FFCRA and CARES Act when looking to pressure insurance companies to reimburse them for the costs of Covid tests. 

“The court in Diagnostic Affiliates found a private right of action within § 3202 of the CARES Act. 2022 WL 214101, at *9,” Arterton wrote in a footnote in the Murphy Medical v. Cigna decision. ​“It concluded that the enforcement provisions within the FFCRA and CARES Act ​‘do not address the manner in which a COVID-19 testing provider can obtain its reimbursements (which are no less mandatory).’ Id. *8. The first enforcement provision, found in § 6001 of the FFCRA, authorizes the Secretary of Health and Human Services, Secretary of Labor, and Secretary of the Treasury to enforce its requirement that insurers cover the cost of COVID-19 tests, which the Diagnostic Affiliates court concluded was ​‘designed for the purpose of ensuring coverage for insureds’ and not necessarily providers. Id. The second enforcement provision, located in § 3202 of the CARES Act, permits the Secretary of Health and Human Services to impose a fine on providers. The district court thus concluded that ​‘the administrative enforcement scheme cannot be said to evidence an intent to deny a private right of action.’ Id.”

2 Counts Still Standing

So. If Arterton’s order on Friday dismissed six counts in this case, including the ​“private right of action” claim, what parts of Murphy’s lawsuit against Cigna remain standing?

Arterton declined to dismiss count three of the lawsuit, which alleges that Cigna mass violated Murphy’s patients’ Employee Retirement Income Security Act of 1974 (“ERISA”) plans when it failed to pay Murphy for the costs of Covid tests. The judge found that Murphy has standing to sue on this front and that he alleged sufficient facts to support a claim that, to quote Murphy’s original lawsuit, Cigna ​“reflexively denied thousands of claims for the exact same clearly reimbursable services, without providing any legitimate justification.” (Arterton’s decision to let that count stand does not mean that Murphy has proven that his accusation is true. It just means that the judge will not dismiss the count before Murphy has a chance to try to prove her is right.)

In particular, Arterton found that the FFCRA and CARES Act ​“effectively modified the terms of ERISA plans to provide SARS-CoV‑2 tests at no cost to a patient. Thus, the relevant plans could not have precluded Cigna’s obligation to reimburse COVID- 19 diagnostic testing in accordance with federal law. Under the circumstances of this case, Plaintiff’s failure to plead the specific plan language or identify the individual assignor-beneficiaries does not warrant dismissal.”

The other count she left standing involved allegations of ​“tortious interference.” That is, Murphy claimed that Cigna interfered with his clinics’ contractual relationships with the sponsors of various Covid-19 testing sites, and thereby hurt his business, by making (to quote Murphy’s lawsuit) ​“defamatory and malicious statements about Dr. Murphy and the Murphy Practice.”

“Cigna claims that Plaintiff baldly pleaded causation and “[i]t is equally plausible — perhaps even more so — that test site sponsors ended their relationships with Plaintiff[] due to negative media reports about Plaintiff[’]s abusive practices.” (Defs.’ Mem. at 32 – 33.),” Arterton wrote. ​“For now, Plaintiff’s allegation of Cigna’s statements, which were designed to cause Plaintiff’s sponsors to break their agreements and caused such a result, (see Am. Compl. ¶¶ 95 – 96, 197 – 201), is adequate ​‘factual amplification’ to render it plausible. See Arista Records LLC, 604 F.3d at 120. The Court will not dismiss the claim on this basis.”

Asked for a comment on Arterton’s decision, Murphy’s lawyer, John Martin, framed the lack-of-dismissal of two of the eight counts of the lawsuit as a win for his client.

“Overall, we view the decision as a win,” he told the Independent by email. ​“While we are disappointed that the Judge did not follow the decision in Diagnostic Affiliates, we are pleased that she agreed with us that the relevant provisions of the FFCRA and the CARES Act are considered to be incorporated into ERISA and therefore we can maintain actions against Cigna’s ERISA plans for their rampant non-compliance with these laws, which we anticipate will cover a significant majority of our claims. Moving forward under ERISA also gives us the opportunity seek legal fees, costs and interest on our claims.”

What’s next in this case?

Both sides returned to federal court on Tuesday morning for oral arguments on Cigna’s June 2021 motion to compel, which calls on Murphy to provide a host of documents and answer questions related to his lawsuit against the insurance company. Arterton has not yet issued a decision on that motion. And on May 25, U.S. District Court Judge Robert A. Richardson is scheduled to host a video settlement conference with the two parties.

Yale: Murphy Is A "Profiteer," Not A Hero

Cigna isn’t the only insurance company or healthcare plan that Murphy has sued in federal court for allegedly not reimbursing him for the costs of Covid-19 tests.

In recent months, he has lobbed similar federal lawsuits at Molina Healthcare of New York, Yale University, EmblemHealth Inc., 1199SEIU National Benefit Fund, United Medical Resources Inc., Magnacare LLC, and Government Employees Health Association Inc.

In the Yale lawsuit, filed on Jan 7., Murphy and his lawyers argue that Yale, ​“one of the most prominent universities in the United States, is blatantly defying federal and state law, as well as principles of equity, by refusing to reimburse Plaintiffs for COVID-19 testing that Plaintiffs provided to members and/or beneficiaries of Yale’s self-funded health plans that Yale offers and administers to students, faculty and/or other eligible Yale affiliates.”

That lawsuit states that Murphy has billed Yale approximately $1.1 million for over 1,500 claims related to Covid-19 testing ​“and related services” provided to Yale Health Plan members.

On Friday, Yale University and Yale Health Plan-hired lawyers Patrick Noonan and Matthew Geelan filed a 34-page memorandum in support of their motion to dismiss Murphy’s lawsuit.

That motion to dismiss covers similar grounds to those brought up by Cigna and Murphy’s outraged patients.

“The plaintiffs in this action seek to portray themselves as heroes on the frontlines of the pandemic who have been unfairly denied payment for providing COVID-19 testing, including testing to members of the Yale community,” Yale’s lawyers wrote. ​“In reality, however, the plaintiffs are more aptly described as profiteers. 

The plaintiffs used the COVID-19 pandemic as an opportunity to grossly overcharge health insurers and payors for medical care, office visits and unnecessary respiratory tests provided to individuals who simply wanted to know whether they were infected with the virus that causes COVID-19. Indeed, plaintiff Steven Murphy, M.D., is on record as stating that: ​“We’re doing medical care… You’re not going to just get a test.” Presumably, this would come as quite a surprise to the many individuals who went to one of Dr. Murphy’s testing facilities seeking to ​“just get a test.” In fact, many patients who sought to ​“just get a test” were surprised when they instead received a ​“suite of unrequested and potentially unrelated medical treatment” and learned their insurance companies were charged in the thousands of dollars for the COVID-19 testing received by Murphy.

Click here to read Yale’s response to the Murphy lawsuit in full.