Carlsbad Mental Health Services is suing insurer Cigna alongside nine other California addiction treatment providers, alleging the company shortchanged them $12.7 million for substance use disorder care.
The lawsuit, filed Wednesday, Aug. 19, in the U.S. District Court for the Central District of California, claims Cigna paid just 16.58% of what the providers billed for treating 83 patients between March 2022 and March 2026, according to Behavioral Health Business. Of $15.2 million billed, the providers say they received only $2.5 million.
The gap: $12.7 million.
The 10 plaintiffs are TML Recovery LLC, Encinitas Detox, Cardiff Health Services, Carlsbad Mental Health Services, Harbor Health, IMS Services, La Costa Recovery, San Diego Mental Health, Southern California Recovery Centers Oceanside and Sunray Services. Several carry North County place names in their titles.
The defendants span Cigna's corporate family: Cigna Health and Life, Evernorth Behavioral Health (also known as Cigna Behavioral Health), Connecticut General Life and Cigna Health Management.
Allegations of a 'hit list'
At the center of the case are unsealed internal Cigna emails and memos from a prior lawsuit between the same parties. Those documents, according to court filings cited by Behavioral Health Business, suggest Cigna leaders maintained a "hit list" of out-of-network substance use disorder facilities for its special investigations unit to track and potentially freeze claim payments.
The complaint alleges that Cigna's audit process dragged on so long that providers either gave up, missed appeal deadlines or closed entirely. Plaintiffs call this a recurring pattern and a possible violation of the Mental Health Parity and Addiction Equity Act (MHPAEA), the federal law requiring insurers to cover behavioral health on equal terms with medical care.
The new case is a sequel to a 2020 lawsuit involving the same parties that closed in November 2024.
Rich Collins, a partner at Arnall Golden Gregory LLP representing the providers, told Behavioral Health Business that the underpayments carry real consequences for patients.
"Unreasonable reimbursement rates that fall below the usual and customary value impose more of the financial responsibility on the patient receiving care," Collins said. "This creates a significant economic barrier to accessing critical behavioral healthcare treatment."
Cigna did not respond to Behavioral Health Business's request for comment on the Aug. 19 lawsuit. In a separate April 2026 statement regarding provider reimbursement complaints in other states, a Cigna spokesperson said paying providers accurately and on time is a priority.
No hearing date or scheduling conference has been publicly announced for the case. The lawsuit seeks to recover the full $12.7 million the providers allege they are owed.
