If you have ever received a Cigna denial that reads "not medically necessary" and wondered whether anyone with a medical license actually looked at the file, you were right to wonder. On October 8, 2025, the California Department of Managed Health Care fined Cigna HealthCare of California $500,000. The reason was that Cigna had been denying claims without a physician completing a clinical review first. At A2Z Billings, we have pulled Cigna denials apart for clients for years, and this fine confirms something our team has suspected for a long time.
What the State Actually Found
The DMHC's investigation found that Cigna reviewed and denied claims as not medically necessary without a physician conducting a clinical review before the denial went out. The department also found Cigna was using a review process that did not match the one it had filed with the state, a separate violation on its own. As part of the settlement, Cigna agreed to pay the fine, re-review every denied claim from the past two years where the non-compliant process was used, and refile a corrected policy with the DMHC.
This is Not Cigna's First Run-in With This Exact Problem
This is not an isolated incident. In July 2023, a class action lawsuit filed in the Eastern District of California accused Cigna of using an algorithm called PXDX to deny claims in batches of hundreds or thousands at a time. According to the complaint, over a two-month period in 2022, Cigna doctors denied more than 300,000 payment requests this way, spending an average of 1.2 seconds on each one. The 2023 lawsuit and the 2025 DMHC fine describe the same basic problem from two different angles. Claims were moving through the system fast enough that no physician could have meaningfully reviewed them.
Why a Cigna Physician Review Denial Should Make You Look Twice
A denial letter that says "not medically necessary" sounds clinical as it shows that a doctor has actually read the chart, and made a judgment call. What the state's findings show is that this letter can go out after a process that never involved that step. For a practice, that distinction matters. A denial built on a real clinical review has to be argued on medical grounds. A denial built on a process that skipped that review can be challenged on procedural grounds instead, and procedural challenges often move faster.
What this Means for Your Practice Right Now
If your practice bills Cigna in California and has collected "not medically necessary" denials over the past two years, some of those claims may fall inside the window DMHC ordered Cigna to re-review. That does not mean the money shows up automatically. It means there is a specific, dated regulatory finding you can point to in a resubmission or appeal, instead of just re-arguing medical necessity from scratch. Pull your Cigna denial log for the last 24 months and separate the "not medically necessary" claims from everything else before you decide what to resubmit.
How to Build an Appeal that does not Rely on Cigna Doing the Right Thing
- Pull every Cigna "not medically necessary" denial from the past two years and flag the ones tied to the review process DMHC found non-compliant.
- Request the reviewer's credentials and the date of clinical review for any denial you plan to appeal, since the finding centers on whether that review happened at all.
- Reference the DMHC's October 8, 2025 enforcement action directly in your appeal letter, with the case details, instead of relying on Cigna to apply the correction on its own.
- Track response deadlines closely. A corrective action plan does not extend your practice's own appeal filing windows.
The Bottom Line
A $500,000 fine will not make Cigna chase down every practice it owes money to. It confirms what many billing teams already suspected and gives you something concrete to cite when you push back.
A2Z Billings has recovered $48 million in denied and underpaid claims for practices across 45-plus specialties, and our appeals team already builds Cigna cases around exactly this kind of regulatory finding. If you have been facing continuous Cigna denials from the past two years, book a free claims audit and find out which ones are worth a second look.
Frequently Asked Questions
1. What did California find that Cigna did wrong?
The DMHC found that Cigna denied health care claims as not medically necessary without a physician completing a clinical review beforehand, and that Cigna used a claims review process different from the one it had filed with the state.
2. Does this fine mean my old Cigna denials get automatically reversed?
No. Cigna agreed to re-review denied claims from the past two years where the non-compliant process was used, but a practice still needs to identify its own affected claims and follow up through appeal or resubmission.
3. What is PXDX and how does it relate to this fine?
PXDX is the claims-screening algorithm named in a separate 2023 class action lawsuit accusing Cigna of denying claims in bulk without individual physician review. It describes a similar pattern to the one the DMHC's 2025 finding addressed, though the two are separate legal actions.
3. How can I tell if my claim was not reviewed by a physician?
Request the reviewer's name, credentials, and the date of clinical review for any denial. A denial with no named reviewer or an unusually fast turnaround time relative to the claim volume is worth a closer look.
4. Does this fine apply to Cigna plans in every state?
No. The DMHC's fine applies specifically to Cigna HealthCare of California and its regulated claims review process in that state.
5. How can a billing partner help after a finding like this?
By pulling your practice's Cigna denial history, matching it against the timeframe and review process named in the DMHC finding, and building appeals that cite the specific regulatory action instead of re-arguing medical necessity alone.
Suggested Photos
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Pairs with the "why this should make you look twice" section. Search: "physician reviewing medical chart screen" or "doctor at desk reviewing records."
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A hand checking off items on a printed appeal checklist
Pairs with the appeal-building checklist section. Search: "checklist clipboard hand" or "appeal documentation checklist."