"I was told that CIGNA doesn't like us to provide a detailed bill," Sell says.

Sell's reply was straightforward: If you don't send an itemized bill, then you'll have to sue to collect. Samaritan backed down and sent an itemized bill showing room charges of $650 per day plus thousands of dollars of other charges, ranging from $5 for a "tongue blade" to $1,010 for laboratory fees.

But the most interesting item was a one-line note attached to the bill stating: "CIGNA contract adjustment and payment have been made, balance due--$906.75."

The term "contract adjustment" set off alarms, and Jim Sell wanted to know more. So he went back to Samaritan's accounting department with a simple question.

"I wanted to know how much of a contract adjustment had CIGNA received," Sell says.

Once again, a Samaritan official told Sell that CIGNA doesn't like contract-adjustment information disclosed.

"I told her, 'Look, the only way you're going to collect from me is to disclose the information,'" Sell says.

"`Otherwise, just sue me for it, because I'm not going to pay.' And so she looks up on the computer, and that's when she told me the amount [of the contract adjustment]. I just about lost it right there."

Sell was stunned to learn that Samaritan had slashed $3,119.75 off the hospital bill sent to CIGNA. While Sell was being told by Samaritan he had to pay 20 percent of a $4,533.75 hospital bill, the actual bill to CIGNA was only $1,414.

It gets worse. CIGNA then deducted Sell's $906.75 share of the itemized bill from the $1,414 discounted bill to determine how much it would actually pay. The bottom line: CIGNA would pay only $507.25.

The magnitude of the discount is clearer when broken down by the percentage each party was to pay. Rather than paying 20 percent of the hospital bill called for under their insurance plan with CIGNA, the Sells were being asked to pay 64 percent of the actual bill sent to CIGNA.

Meanwhile, CIGNA, which promised to pay 80 percent of the hospital charges, was paying only 36 percent of the actual bill, based on the discounted charges the company had secretly negotiated with Samaritan.

Sell was outraged. A day later, he walked into the Phoenix law offices of Jaburg & Wilk and met with attorney Leon B. Silver to begin work on a federal class-action lawsuit against CIGNA. After three years of research, the suit was filed earlier this summer.

"I certainly didn't contract with the insurance company to conspire with the hospital to rip me off," Sell says.

The Sells filed their class-action suit in U.S. District Court in Phoenix last June, naming CIGNA HealthCare of Arizona Inc. and two affiliated CIGNA companies as defendants.

The suit alleges that CIGNA violated state and federal racketeering laws because the insurance firm contracted with hospitals to pay a lower rate for services than the hospitals charged to CIGNA's own clients.

The suit also claims CIGNA violated federal insurance laws and engaged in false advertising, fraud, negligent misrepresentation and breach of contract.

CIGNA corporate officials refuse to discuss the case. "We don't feel it is appropriate to comment," CIGNA spokeswoman Annie Mooney says.

CIGNA's attorneys, the powerful Phoenix law firm of Snell & Wilmer, are not denying that CIGNA has negotiated hospital discounts different from the rates charged to CIGNA's clients.

Instead, the lawyers argue in court documents that the Sells were aware of this arrangement, because it is stated in their insurance contract. Therefore, by CIGNA's reasoning, the Sells shouldn't have been surprised that CIGNA received a discount from Samaritan.

Samaritan officials have also declined to comment specifically on the Sells' situation. But Samaritan spokeswoman Sue Chasin says that the hospital bills patients based on whatever agreements are reached between the hospital and the insurance companies.

Chasin declined to discuss the details of the contract between CIGNA and Samaritan. But she did say it was possible that the hospital billed CIGNA's clients at a rate higher than what the hospital charged the insurance company.

"It would all depend on what's in the contract between CIGNA and the patient. We just follow the terms of the contract," Chasin says.

The CIGNA contract with the Sells is written in the type of legalese that no one but a lawyer could love. It states that the insured "shall be liable for a designated percentage of the Usual and Customary Fee charged for In-Patient Hospital Services." The contract goes on to state that "`Usual and Customary Fee means the current charge of the provider of care on a nondiscounted fee-for-service basis."

In other words, CIGNA's customers under this plan are required to pay a set percentage--in the Sells' case, 20 percent--of the hospital's itemized bill.

The CIGNA contract then adds another provision that simply states: "The balance of the charges for In-Patient Hospital Services . . . shall be paid by" CIGNA.

Nowhere does the contract explicitly state that the balance of the charges to be paid by CIGNA are based on a secret discounted pricing schedule not available to the insured.

This duplicity is what has the Sells so angry.
"I would be agreeable to pay on the same basis as they do," Sell says. "The difference is I paid in cash, and they paid in Monopoly money."

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