Did Cigna Wait Too Long to Sue Reference Labs for Fraudulent Billing?

Case: Health service company Cigna sued five labs for fraudulent billing of tests that were farmed out to reference labs. The federal court dismissed some of the claims as being barred by the statute of limitations, leaving Cigna with only “equitable” claims that aren’t subject to a statute of limitations. But the labs asserted the defense of “laches,” essentially a statute of limitations for equitable claims, to get the court to toss the remaining three claims. The Connecticut federal court denied the motion. Significance: To make out a laches defense, the labs had to prove: (1) Cigna was guilty of “unreasonable and inexcusable delay,” and; (ii) the delay “resulted in prejudice” to the labs. The second prong turned out to be the labs’ undoing. That’s because unlike the statute of limitations, which prevents a case from going to trial in the first place, laches applies during the trial. And because the labs could still keep the laches defense in their pocket for use at trial, they didn’t suffer prejudice as a result of Cigna’s delay [Conn. Gen. Life Ins. Co. v. BioHealth Labs., Inc., 2021 U.S. Dist. LEXIS 224612, 2021 WL 5447142].