Maine Superintendent Assesses Record Fine on CIGNA Healthcare, CIGNA Behavioral Health

Maine Superintendent of Insurance Alessandro Iuppa recently announced that CIGNA Healthcare of Maine, Inc., and CIGNA Behavioral Health (collectively “CIGNA”) have been fined a total of $900,000 for reported multiple violations of Maine law. The fine, which was assessed as part of a consent decree with the companies, constitutes the largest fine ever levied by the Maine Bureau of Insurance.

CIGNA Healthcare of Maine, Inc. holds a certificate of authority to operate in Maine as a health maintenance organization (“HMO”). CIGNA Behavioral Health holds a license as a medical utilization review service that reviews the necessity, use, or appropriateness of behavioral health care services, and as a third-party administrator.

The companies were reportedly found to have violated Maine law for failing to pay claims on time, failing to pay interest due, failing to keep supporting claim documentation and failing to have adequate procedures for identifying and correcting errors in a timely manner. In addition to the fine, the companies must pay restitution of interest to affected claimants.

Both entities must pay combined restitution to affected claimants for interest due for late paid claims of approximately $915,000 for calendar years 2001 and 2002. For prior years the companies must provide additional unpaid interest for claims processed from Sept. 18, 1999 (the date the present text of Maine’s prompt pay law took effect) to Jan. 1, 2001. The companies will have until the end of January 2004 to calculate the additional interest due. The aggregate amount for the four years will be the largest award of restitution ever obtained for claimants by the Maine Bureau of Insurance.

“Maine’s prompt pay law requires insurers to pay claims within 30 days, unless the claim is disputed; otherwise, interest on the claim is owed,” stated Iuppa. “The State takes these violations seriously. Doctors and patients should not have to spend time worrying about an insurance company paying its bills on time.”

In addition to the claims payment issue, the consent agreement resolves a number of other violations. These include: complaint handling, company grievance procedures, records retention, failure to actively market individual health plan coverage, and member notification concerning plan cancellation. One of the most startling findings to reportedly emerge from the examination was the fact that CIGNA’s own grievance review process overturned initial claim denials, when appealed, a significant percent of the time.

“The Bureau’s exam uncovered multiple violations of Maine’s Insurance Code. These findings led us to conclude that CIGNA needs to undertake some very significant internal changes. The fact that the company’s grievance process overturned such a high percentage of claim denials appealed by its customers emphasizes the need for changes in the way claims are handled,” continued Iuppa.

The consent agreement requires that the companies file a plan of corrective action for the Superintendent’s review and approval that addresses each violation of law listed in the consent agreement. The action plan was due to the Superintendent by Dec. 31, 2003.

“The fines levied under this agreement are only the first step in the process. What we’re most concerned about at this point is corrective action. We want to see fundamental changes to ensure that these problems are addressed and avoided in the future,” said Iuppa.

The Superintendent singled out the grievance process as one area where the Bureau sought reforms.

“A fair, well-documented appeal and grievance process is essential for achieving consumer confidence in health plans,” said Iuppa.

“We’re pleased that CIGNA recognized the seriousness of our concerns and agreed to enter into a consent agreement. The record-high fine is appropriate given the number and nature of the violations. With the adoption of this consent agreement, more than $915,000 will be returned directly to affected Maine consumers and health care providers, while CIGNA embarks on a plan of corrective action that the Bureau will closely monitor,” added Iuppa.