By: Christopher Parrella, Esq., CPC, CHC, CPCO Parrella Health Law, Boston, MA. A Health Care Provider Defense and Compliance Firm

Cigna Health and Life Insurance Company agreed to settle a class action lawsuit over allegations that it misled health plan participants by advertising out-of-network providers as in-network. The case, filed in the Northern District of Illinois, highlights the growing legal risks tied to so-called “ghost networks” in employer-sponsored benefit plans.

What the Case Was About

The plaintiffs, Andrew and Andrea Hecht, filed suit in July 2024 on behalf of a proposed class of participants in Cigna-administered health plans. They claimed that Cigna maintained inaccurate provider directories, a practice described in the complaint as a ghost network. The plaintiffs argued that these misrepresentations violated the Employee Retirement Income Security Act (ERISA) by failing to uphold the terms of the plans and by breaching Cigna’s fiduciary duties of care and loyalty.

The Hechts alleged that Cigna’s miscommunications caused real harm. They pointed to a hospital bill they believed was covered in-network but was later sent to collections when coverage was denied.

How the Case Progressed

In May 2025, U.S. District Judge Manish S. Shah dismissed some of the claims, including attempts to recover benefits under ERISA and claims alleging breach of plan terms. The judge found the pleadings lacked specific allegations that benefits were wrongfully withheld. However, Judge Shah allowed the fiduciary duty claim to proceed, noting that the complaint had sufficiently alleged harm tied to inaccurate in-network information. That surviving claim proved to be the pressure point that kept the case alive.

The Settlement

After mediation with retired Judge James Holderman on August 4, 2025, the parties reached a settlement in principle. A joint status report filed on August 25 confirmed that the deal had been reached and that the plaintiffs would seek preliminary court approval by September 19. While the settlement terms have not yet been disclosed, the resolution avoids prolonged litigation and underscores the exposure payers face when their provider directories fail to reflect reality.

Why This Matters for Providers

Although this case was brought by plan participants, it signals a broader trend. Regulators, plaintiffs’ lawyers, and courts are scrutinizing the accuracy of provider directories with more intensity. For providers, ghost network allegations often spill over into reimbursement disputes, contract fights, and SIU investigations.

Behavioral health and substance use disorder providers are particularly vulnerable. These facilities frequently report being listed as in-network without contracts, or excluded entirely despite patient reliance on faulty directory information. In either case, providers are left caught between payers and patients.

Key Takeaways

• Payers face increased litigation exposure under ERISA for inaccurate directories.
• Courts may dismiss certain benefit-related claims but fiduciary duty theories remain a strong path for plaintiffs.
• Providers should monitor how their practice is represented in payer directories and document any discrepancies, as these can directly affect reimbursement disputes and patient collections.
• Settlement in cases like this suggests payers may prefer resolution over litigating directory inaccuracies in open court.

If you have any questions or comments about the subject of this blog, please contact Parrella Health Law at 857.328.0382 or Chris directly at cparrella@parrellahealthlaw.com.