Cigna settles state finding of unfair health insurance practices

Cigna Health and Life Insurance Company has agreed to pay $236,900 to settle Virginia Bureau of Insurance allegations that a review of its business in 2018 and 2019 found 947 violations and instances of noncompliance with state insurance law and regulations.

The company agreed to a 43-point corrective action plan that includes changes to the way it handles claims, explains its actions to policyholders and works with physicians, pharmacists and other health care providers.

In making the settlement agreement and accepting the corrective action plan, Cigna regional Vice President Katie Stewart said the company was not admitting it had violated any Virginia law or regulation.

A Bureau of Insurance market conduct examination found that Cigna had failed to promptly and fairly settle claims where liability was reasonably clear, by initially underpaying or denying claims after incorrectly saying providers weren't in a network or by failing to recognize prior authorization for procedures was on file.

The bureau said this happened often enough to be a general business practice at Cigna.

While Cigna eventually corrected these errors, it did not make the final correct payment until several months later, the review reported.

In one case, Cigna initially overcharged an insured member's cost sharing on a claim after that person had already paid the maximum out-of-pocket amount specified in the individual's policy, the bureau review said. When the company tried to correct its error, it did so based on a different claim from a different provider.

The bureau examination also found that when Cigna denied claims it did not tell policyholders in writing, as state regulations require; the bureau found 101 cases of this happening and determined it was a general business practice.

In addition, Cigna issued explanations of benefits that stated it paid $0.00 on a claim but did not explain that this was because it denied the claim, the review said.

The bureau review found 49 instances where Cigna required customers to pay a coinsurance or deductible calculated on an amount higher than the amount actually payable to a health care provider.

The review found this was a knowing and willful violation.

The review found that Cigna applied limitations and financial requirements for mental health and substance abuse treatments that were more restrictive than medical and surgical claims in violation of state and federal law.

The bureau said the company improperly tried to reduce benefits when an individual was eligible for reimbursement under a car insurance policy.

In addition, it paid less interest on delayed claims payments than state law requires, the bureau said.

The bureau examination also found that it had failed to pay providers what its contracts' fee schedules said it would, and that this happened often enough to be a general business practice.