ALBANY, N.Y.—Health insurer Aetna paid a fine of $850,000 to settle charges including incomplete disclosures on “explanation of benefit” forms to consumers, and violations of New York’s prompt pay requirements, New York State Insurance Superintendent James Wrynn announced.

“With medical bills so detailed and potentially confusing these days, consumers need an easy way to know how much they have to pay and why,” Wrynn said. “That information should be clearly stated on the explanation of benefit form. The form should also tell consumers how to appeal if they think they are being asked to pay an incorrect amount and how to appeal the insurer’s decision not to provide coverage if it has been denied. This significant fine shows we will make sure consumers have the tools they need to make the decisions they have to.”

Aetna’s violations included:

• Failing to issue explanation of benefit forms in certain required instances;

• Issuing explanation of benefit forms that failed to identify the service for which the claim was made;

• Issuing explanation of benefit forms that failed to contain a specific explanation for not providing full reimbursement for the amount claimed; and

• Issuing explanation of benefit forms that failed to contain the information regarding the claimant’s right to appeal a denial of benefits.

The Insurance Department also found that Aetna violated New York’s “Prompt Pay Law” by failing to adjudicate certain health care claims within 45 days of receipt; failing to deny certain health care claims or request additional information about such claims within thirty days of receipt of the claim; and failing to pay interest or incorrectly paying interest on certain claims that were paid after 45 days of receipt, as required by statute.

Additional findings uncovered by the Insurance Department included Aetna’s failure to fully comply with the requirements regarding disclosure of information to be disseminated to insureds and prospective insureds and certain utilization review requirements. In addition, Aetna failed to provide certain appeal rights mandated by New York Insurance Law to members located outside of New York State. “While the monetary penalty is reflective of the serious and systemic nature of Aetna’s practices, I am encouraged by the company’s level of commitment in addressing the Department’s findings and working to improve its performance going forward,” said Wrynn.

Aetna is to take all steps necessary to prevent the recurrence of similar violations. Specifically, Aetna agreed to revise its procedures regarding the issuance of explanation of benefit forms and their content, its appeal requirements and the information provided to insureds and prospective insureds. Further, it agreed to review its claims adjudication procedures and develop and submit a plan for improving compliance with the Prompt Pay Law.

The Aetna companies included in the settlement were Aetna Health Inc., a health maintenance organization, Aetna Health Insurance Company of New York, an affiliated accident and health insurer and Aetna Life Insurance Company, an affiliated Connecticut domestic life and accident and health insurer licensed in New York. This settlement resulted from a joint effort of the Insurance Department’s Health Bureau and Office of General Counsel.

 TV, Internet Health Plan Sales Agent Fined $500,000: Cinergy Misleadingly Offered Health Coverage for “Little More Than $5 per Day”

NEW YORK, N.Y.—Cinergy Health Inc., a Florida-based insurance agent that advertised low cost health insurance plans on late night television, the Internet and through telemarketers, has been fined $500,000 for violations including misleading consumers into believing they were buying comprehensive health insurance, New York Insurance Superintendent James J. Wrynn announced. Instead, buyers received limited benefit health insurance plans also known as “minimeds,” which normally provide substantially less than comprehensive hospital/medical coverage. When injury or illness occurred and consumers filed claims, many found that their claims were not covered, and they were left with large unpaid medical bills. Cinergy and its sublicensee, Steven Trattner, settled with the Department, agreeing to the fine and to comply with a code of conduct setting strict standards for any future sales of limited medical benefit plans in New York.

“Having good health insurance can literally be a matter of life and death,” Wrynn said. “We will not allow unscrupulous marketing practices that prey on New Yorkers and their need for affordable health insurance. Medical bills are the leading cause of personal bankruptcy filings and consumers rightly want insurance protection from such expenses. But in seeking that protection, they should not be exposed to the type of misleading practices Cinergy demonstrated.”

Cinergy and Trattner agreed that among other violations of the Insurance Law, they had:

• Used television commercials, advertisements and other marketing materials, that:

1. Failed to fairly and accurately disclose the limitations in the coverage;

2. Created the false impression in some individuals that the coverage was a substitute for major medical or other comprehensive health insurance coverage;

3. Did not adequately disclose the policy limits and exclusions for pre-existing conditions; and

4. Failed to prominently indicate the name and principal office location of the insurer underwriting the coverage, instead creating the incorrect impression that the coverage was being offered by “Cinergy Health.”

• Operated call centers where agents gave inaccurate or misleading information to the public about the nature and cost of coverage and who was providing that coverage;

• Tacked on additional charges to monthly premiums for various noninsurance benefits without disclosing the amount of such charges;

• Collected unauthorized fees from consumers;

• Failed to provide consumers who applied for insurance with required written disclosures regarding the limited nature of the medical coverage provided under the health plans; and

• Used unlicensed agents to sell insurance.

“These are egregious violations of the Insurance Law and of consumer rights,” Wrynn said. “To protect consumers in the future, Cinergy will have to follow a strict set of marketing standards that we have imposed.”

Under the standards imposed by the Department stipulation, Cinergy must:

• Ensure all its advertising is accurate and approved by both legal counsel and the health insurer backing its product;

• Charge for and collect only the health insurance premium;

• Bill separately and clearly for any other services provided;

• Sell group health insurance only to qualified groups and their members and not to associations formed or maintained primarily for the purpose of obtaining insurance;

• Sell group health insurance only to existing members of qualified groups and associations and not act on behalf of such groups and associations in enrolling new members;

• Make sure all its staff is properly licensed;

• Use approved application forms that provide all required warnings regarding limitations in coverage;

• Train its telemarketers to offer complete and correct information about coverage; and

• Provide insureds with either a copy of the insurance policy or an approved certificate of insurance containing a detailed description of the coverage.

Cinergy must also report detailed information on its New York sales of group health insurance to the Department every 90 days, and must take any additional steps necessary to prevent a reoccurrence of its previous violations.

 

Carting Company Owner Charged with Fraud

The Manhattan District Attorney’s Office arrested a carting company owner charged with cheating the New York State Insurance Fund out of more than $50,000 in an alleged case of worker’s compensation fraud.

Manhattan DA Cyrus Vance charged Jarruth Duncan,44, with offering a false instrument for filing on September 20, 2010, following an investigation initiated by NYSIF’s Division of Confidential Investigations (DCI).

Investigators said Mr. Duncan, owner of Chesterfield Carting, Inc., in the Bronx allegedly underreported his payroll to avoid paying the proper premium on a workers’ compensation policy with NYSIF.

Between July, 2006 and July, 2008 Duncan is alleged to have provided false information to NYSIF resulting in a loss of $52,115 in premium to the insurance carrier. NYSIF received assistance in its investigation from the New York Insurance Department Frauds Bureau.

Criminal complaints and indictments are accusations only. Defendants are presumed innocent until proven guilty.[