Judge Approving Cigna Liposuction Deal Raises Inflation Concerns

A class settlement requiring Cigna Health & Life Insurance Co. to expand its coverage of specialized liposuction received final approval in a court order that raised concerns about how inflation is affecting the standards governing class action settlements.

The order by Judge Jon S. Tigar, issued Tuesday in the US District Court for the Northern District of California, blesses a 239-person class deal that was struck after Cigna changed its policy on liposuction coverage in the wake of Banafsheh Akhlaghi’s lawsuit raising claims under the Employee Retirement Income Security Act.

Cigna’s new policy, in which it now finds that liposuction is a medically necessary treatment for lipedema if certain criteria are met, is “built into the Settlement” and won’t be changed unless there’s a relevant change in the medical consensus, according to the settlement motion.

In addition to approving the deal and granting class counsel’s request for more than $560,000 in attorneys’ fees and costs, Tigar issued a $6,752 incentive award to Akhlaghi for her work as the class representative. Tigar explained that this amount has the same buying power that $5,000 had in 2012, when courts within the Ninth Circuit recognized that figure as a reasonable amount for an incentive award.

Tigar issued a general warning to his colleagues on the bench, saying that “at some point, the common law will have to reckon with inflation.” According to Tigar, the problem “will only become more pronounced” because the annual inflation rate is currently 3.7%.

Akhlaghi, who had requested an incentive award of $15,000 based on the effort she spent on the case, didn’t mention inflation in her motion. Tigar appeared unpersuaded by these arguments, saying that a “presumptively reasonable award, adjusted for inflation, adequately compensates Akhlaghi for these efforts.”

The lawsuit said Cigna incorrectly treated liposuction surgery as an experimental or unproven treatment for lipedema, which is a chronic buildup of fat tissue that causes pain, mobility problems, and joint disorders. Unlike lifestyle-related or diet-induced obesity, lipedema typically requires liposuction because it can’t be effectively treated with bariatric surgery or lifestyle changes, Akhlaghi said in the lawsuit.

The settlement allows lipedema patients whose requests for liposuction coverage were previously denied to have Cigna reprocess their requests under the new policy. Class members who paid out-of-pocket for liposuction can make claims for reimbursement to the extent those payments weren’t covered by Medicare or other insurance.

Gianelli & Morris ALC represents Akhlaghi. Cooley LLP represents Cigna.

The case is Akhlaghi v. Cigna Corp., N.D. Cal., No. 4:19-cv-03754, settlement approval order 10/10/23.