Transcript Hot Topics and MCE Trends - 2011

Hot Topics and MCE Trends - 2011
Today’s Hot Topics & Enforcement Trends
A look back at 2010
• Its “hot topics”
• Its enforcement issues
What does 2011 present to us?
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Background
• Consumer Protection focus - states
• Financial Services Reform
• Health Care Reform
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Property & Casualty:
2010-2011
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States’ Focus - 2010
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Disclosures
Auto Claims
Anti-Fraud
Credit Scoring
Certificates of Insurance
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Claims Release Disclosure
New Hampshire
• WARNING "IF YOU SIGN THIS RELEASE YOU MAY FORFEIT YOUR RIGHT
TO UNINSURED MOTORIST INSURANCE BENEFITS FROM YOUR OWN
AUTOMOBILE INSURANCE POLICY. CONSULT WITH YOUR INSURANCE
AGENT, YOUR AUTOMOBILE INSURANCE COMPANY, OR YOUR
ATTORNEY BEFORE SIGNING."
• I certify that I have read the above warning and fully understand it.
Effective January 1, 2010
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Policy Limits Disclosure
New Hampshire
• Disclosure to the claimant, or his or her counsel, the
policy limits of the policy or policies of all liability
insurance applicable to the defendant as to such claim.
Effective January 1, 2010
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WC Medical Records Disclosure
New Hampshire
• Request for medical records must contain this notice in:
1. bold print
2. font size at least 2 points larger than that used in the request:
• "This request is strictly limited to medical information relevant to
the occupational injury or illness that underlies the patient's
workers' compensation claim, including any past history of
complaints of, or treatment of, a condition similar to that
presented in the claim."
Effective July 1, 2010
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Workers’ Comp Disclosures
Oregon
• Following the death of a worker all future notices are
required to be addressed to the workers’ estate or
qualified beneficiary
• New notification requirement for workers with multiple
jobs at the time of injury
• Notifications of acceptance and denial of claims must
advise the worker of the two-year time limitation to
request reimbursement
Effective January 1, 2010
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UM/UIM Disclosure
Utah
• UM/UIM insurance companies must provide a written
response to a covered person’s demand for uninsured or
underinsured motorist compensation within 60 days
• Additional procedures for litigating or arbitrating a
demand for UM/UIM
Effective March 30, 2010
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Total Losses
Oregon
• Provide any valuation or appraisal reports relied upon by
the insurer to determine value of total loss
• DOI developed disclosure form that includes information
about the total loss, vehicle valuation, and the duties of
the insurer, how and when the insured may contact the
Division
Effective January 1, 2010
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Total Losses
Louisiana
• Policy provides for the adjustment and settlement of vehicle total
losses for ACV or replacement with like kind and quality
• The insurance company chooses a cash settlement based on the
actual cost to purchase a comparable motor vehicle
• Costs must be derived by using either a fair market value survey
conducted using qualified dealers in the local market area, or, if
there are no dealers in the local market area, the nearest
reasonable market can be used
Effective August 15, 2010
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Total Losses
Connecticut
• Retail value of a total loss vehicle may be determined
from any publicly available automobile industry source
approved by the DOI
• Insurers must provide written notice including the
insurance company's calculation of the vehicle's total
loss, a valuation report and a notice to dispute the
claims settlement
Effective January 1, 2011
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Fraud Initiatives - 2010
• Arizona: Makes it a crime for an auto glass repair shop
to bill an insurer for misrepresentations on a repair of
an automobile
• California: DOI meetings with insurers to discuss
insurance fraud; immunity for meeting discussions of
specific suspected, anticipated, or completed acts of
insurance fraud – ALL LINES
• Louisiana: Requirement to submit fraud plans to DOI –
ALL LINES
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Fraud Initiatives - 2010 (All Lines)
Louisiana (January 1, 2011)
Anti-fraud plan
• Must be filed with the commissioner
• Must outline specific procedures, actions, and safeguards
• Must include how the authorized insurer will:
1. Detect, investigate, and prevent all forms of insurance fraud ,
2. Educate appropriate employees on fraud detection and the
insurer's or health maintenance organization's anti-fraud plan.
3. Provide for fraud investigations
4. Report a suspected fraudulent insurance act to the DOI and
others
5. Pursue restitution for financial loss caused by insurance fraud
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Fraud Initiatives - 2010 (All Lines)
Rhode Island
• All insurance companies must have anti-fraud initiatives
in place for detection, reporting, preventing fraud
• May include:
1. Fraud investigators, who may be insurer employees or
independent contractors; or
2. An antifraud plan
Effective January 1, 2011
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Credit Scoring – ELC Activity
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Connecticut
Indiana
Iowa
Kansas
New Hampshire
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Credit Scoring - ELC
Connecticut
• Insurers must disclose to each applicant that the credit history
maybe used in the underwriting or rating of applicant’s policy, and
• That the applicant has the right to request, in writing, that the
insurer consider an extraordinary life circumstance which occurred
within 3 years before the date of the application
• Insurer must provide at policy issuance a written disclosure that
includes:
1. Insurer name, address, telephone number and toll-free telephone
number
2. Details about how credit information is used to underwrite or rate
3. Summary of consumer protections regarding the use of credit
Effective July 1, 2011
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Credit Scoring - ELC
Iowa/Kansas/New Hampshire
• Written request from a consumer
• Insurer shall provide reasonable exceptions to the
insurer's rates, rating classifications, company or tier
placement, or underwriting rules or guidelines for a
consumer who has experienced and whose credit
information has been directly influenced by
extraordinary life circumstances
Effective July 1, 2010
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Credit Scoring - 2010
Connecticut:
• Adverse action cannot be based solely on information
contained in an insured's or applicant's:
1. credit history
2. credit rating, or
3. lack of credit history
Effective January 1, 2011
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Credit Scoring - 2010
New Hampshire:
• Insurers prohibited from cancelling, nonrenewing, or
declining automobile or homeowners policies solely on
the basis of credit information obtained from a credit
rating, a credit history, or a credit scoring model,
without consideration of any other applicable and
permitted underwriting factors independent of credit
information
Effective January 1, 2011
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Certificates of Insurance - 2010
• Arkansas, Connecticut, Iowa, Kansas, Missouri,
Montana, Nebraska, North Dakota, Texas and Utah
issued bulletins in 2010
• Essentially serving as reminders about not issuing or
using a Certificate of Insurance form that contains
language that conflicts with or purports to alter any
policy coverage, exclusion, provision or condition
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Certificates of Insurance - 2010
Texas – Evidence of Commercial Property Insurance
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Forms are sometimes issued as “a matter of information only” or
similar language without the contemporaneous issuance of a
binding document or policy of insurance
Insurers or agents should not use any form or make attestations
that do not accurately reflect what actually exists for the benefit
of the policyholder or beneficiary, whether the form or attestation
references a binder, policy, or action to be taken by the insurer
with regard to issuing a binder or policy
Insurers or agents should not issue or sign forms that create rights
and obligations outside the insurance contract
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Certificates of Insurance - 2011
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Arizona’s Bulletin 2011-01: outlines the requirements that
certificates must clearly and accurately state the insurance
coverage provided and may not obscure or misrepresent the
coverage or terms of a policy, the Bulletin also addresses
producers’ responsibilities and possible enforcement actions.
Georgia’s Directive 11-EX-2 serves as a reminder that every
certificate of insurance, except automobile liability insurance
cards, is to include the following statement, or a substantially
similar one, printed conspicuously and in no smaller than 10 point
font, boldfaced type: “This document is issued as a matter of
information only and confers no rights upon the document holder.
This document does not amend, extend, or alter the coverage,
terms, exclusions, conditions, or other provisions afforded by the
policies referenced herein.”
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Credit Scoring – 2011
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Rhode Island: Regulation 116 establishes guidelines regarding the use of insurance
scores in underwriting and rating of homeowners and/or private passenger
automobile insurance when a consumer experiences an extraordinary life event.
Adopted
Maine HP 294: An insurer that obtains credit information on a consumer shall
provide the consumer with notice of the consumer’s credit score and identify the
impact of that score on rates and coverage as part of the policy issued to the
consumer. Pending
Mississippi’s SB 2674: prohibit an insurer from requiring a particular payment plan
for an insured under a private passenger or homeowner's insurance policy based on
the insured’s credit history, as well as from using credit information in determining
rating or eligibility for coverage. Pending
Montana HB 29 and SB 137:extraordinary life circumstances in personal lines
underwriting and the use of credit information in automobile insurance rating and
coverage eligibility, respectively. Pending
Ohio’s HB 615: prohibitions on insurers’ use of a credit score, credit history, or
credit report in rating or underwriting. Pending
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Credit Scoring – 2011
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Pennsylvania’s SB 126:prohibit an insurer from denying, canceling or
refusing to renew personal insurance due in whole or in part to an
insured's credit history. Pending
South Carolina HB 3101 and SB 85: prohibitions on the use of credit reports
in rating and underwriting. Pending
Texas’ HB 194: prohibit an insurer from rating a risk based wholly or partly
on the credit information, credit report, or credit score. Pending
West Virginia: Pending
HB 2049 seeks to prohibit the use of a person's credit history in insurance
transactions
HB 2319 would prohibit the use of credit scores in casualty rate filings
HB 2467 would not only prohibit the use of credit scoring as a rating factor
in homeowners or automobile liability policies, but also prohibit
declinations of automobile insurance if based, in any part, upon the
number of inquiries reflected in a credit report, credit score report or
CLUE report or upon any information contained in any of these reports, if
the accuracy is disputed by the applicant.
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Consumer Protection – 2011- Pending
• Connecticut’s SB 168: would prohibit property and
casualty insurers from assessing late fees on
policyholders who make late premium payments.
• New Jersey’s AB 3509 and SB 2432 both seek a
requirement for insurers to allow payment of
homeowners' insurance premiums in monthly
installments.
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Consumer Protection – 2011- Pending
Maryland: SB 136
• Homeowner's insurers to provide to an applicant or insured, at the
time of application or renewal, a written notice that states
whether the insurer's standard homeowner's insurance policy
provides coverage for loss that:
1. is caused by or results from a discharge of water from a plumbing
system or plumbing source, including a discharge from a water
main break, whether the plumbing system or plumbing source is
located on or off the insured premises; and
2. is not caused by the negligence of the insured.
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Mississippi - Pending
• HB 1199: insurer to provide a clear written disclosure of
the actual costs of each item of coverage contained in
the renewal policy. The disclosure shall express the
costs as the actual rate or cost per $1,000 of coverage
of each item of coverage, and as the actual total cost
of each item of coverage.
• HB 1240: liability insurer shall disclose the limits of any
policy to a third-party claimant
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Life & Annuities: 2010-2011
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Life & Annuities
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Suitability
Retained Asset Accounts
STOLI/STOA
Annuity Disclosures
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Suitability Model Law Changes
• Adopted at NAIC Spring Meeting in Denver
• Insurer is responsible for compliance with the model’s
requirements, even if insurer contracts with 3rd party
• Insurer to review all annuity transactions
• Establishes both general and product-specific training
requirements for producers
• States can, of course, exceed model’s new requirements
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Suitability Model Scope
• Carrier review of all fixed-annuity transactions
• Greater supervisory responsibility on insurance
companies which need to:
1. Determine the suitability of agents' annuity
recommendations
2. Document non-recommended transactions
3. Provide annuity and suitability training
• Carriers are requesting more information on their
applications and adding more screening to assess
suitability
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Supervision System – Procedures & Training
It’s all about compliance:
• Reasonable procedures to inform insurance producers
• Incorporate Model’s requirements into producer training
manuals
• Establish standards for insurance producer product
specific training (PST)
• Maintain reasonable procedures to require producers to
comply with the CE and training requirements
• Product specific training and training materials which
explain all material features of its annuity products to
producers
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2010 Activity - Suitability
Iowa
• Provides standards and procedures for
recommendations to consumers involving annuity
products
• Brings the rules into accord with a new NAIC model
regulation.
• Requires insurers to establish a system to supervise
recommendations, as well as to set forth standards and
procedures for recommendations to consumers that
result in transactions involving annuity products
Effective January 1, 2011
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2010 Activity - Suitability
• Newly adopting jurisdictions, the District of Columbia
and New York, essentially follow the Model, with an
effective date of Dec. 24, 2010 for the District of
Columbia. New York actually promulgated an
“Emergency Regulation No. 187” with an initial
timeframe of Dec. 29, 2010 to Mar. 26, 2011.
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2010 Activity - Suitability
Arkansas
• Rule 50 Annuity suitability training course approval form effective
9/30/10
Oklahoma
• New training requirement: one-time four hour annuity course
• Insurers must ensure producers are able to verify completion of the
required training
• Verification of training lies with insurer
• Producers are ultimately responsible to complete the training in
accordance
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Recent Activity - Suitability
• Colorado, Rhode Island and Ohio adopted similar
changes to their rules and regulations, with recent final
adoptions resulting in effective dates of April 1, June 1,
and July 1 2011, respectively.
• Oregon has also adopted additional regulatory
requirements generally consistent with the Model with
a primary effective date of July 1, 2011.
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Retained Asset Accounts Activity - 2010
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Maryland
Delaware
Kentucky
Montana
New Jersey
New Hampshire
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Retained Asset Accounts Activity - 2011
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Maryland - pending
Iowa
New York – pending
Connecticut
Maine
New Jersey
Ohio
Virginia – pending
Indiana - pending
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STOLI/Life Settlements - 2010
New Hampshire’s HB 660
1. 5 year period (exceptions apply)
2. Requires insurers to respond to a request for
verification of coverage within 30 calendar days
3. Requires insurers to indicate intention to pursue an
investigation regarding contract or fraud
4. Prohibits the use of life settlement contract forms or
disclosure statement forms unless first filed with and
approved by the DOI
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STOLI/Life Settlements - 2010
• Wisconsin’s SB 513
1. 5 year waiting period before new life insurance
policies can be sold (exceptions apply)
2. Seen as step in STOLI prevention
3. OIC to adopt rules including a disclosure
requirement
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STOA - 2010
New Jersey Bulletin 10-14
• Ask applicants and/or producers “targeted” questions
1. purpose of the purchase
2. relationship between agent/broker and annuitant
3. health status of the annuitant
4. source of funds for premium payments
5. whether an insurable interest exists between the owner of the annuity and
the annuitant
• Closely monitor contract deposits
• Follow up with calls to annuitants and contract owners;
• Redesign variable annuity contracts, e.g., no guaranteed minimum death
benefit (GMDB) during the first two years, bolster the contestability clause
• Report suspected transactions to Office of Consumer Protection Services
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Annuity Disclosures - 2010
Idaho
• Applicant, at or before the time of application, must be given both
the disclosure document and the buyer’s guide in the form
prescribed by the director
• Disclosure document shall be dated and signed by the prospective
annuity owner and producer and the company shall maintain a
signed copy for the life of the contract.
If the application for an annuity contract is taken by means other than
face-to-face, applicant shall be sent both the
• Disclosure document and the buyer’s guide no later than 5 business
days after the completed application is received by the insurer
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Health: 2010 - 2011
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Health
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Health rates oversight
Discretionary Clauses
Mandated Benefits
All that is “PPACA”
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Health Rate Oversight
• Connecticut HB 5079: Proposes requirement that the
Department hold a public hearing for proposed health
insurance rate increases - Pending
• Washington HB 1220/SB 5120 -Pending
• California OAL approved request for an emergency
regulation providing DOI authority to enforce the 80%
Medical Loss Ratio (MLR)
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Discretionary Clauses - 2010
• New York: Proposed prohibiting insurance carriers from
inserting discretionary clauses in insurance policies,
including LTD policies
• Texas: issued bulletin requesting that filings not include
these
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Discretionary Clauses - 2011
Texas
• Order and newly adopted rules prohibit discretionary
clauses (2010)
• Effective February 1, 2011 for disability income
insurance
• June 1, 2011 for other health, life, and disability
policies
• Past claims will not be affected
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Discretionary Clauses
District of Columbia
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DOI will examine policies which have these clauses to determine if any discretionary
clause can be used improperly to deny claims or to restrict any rights an insured has
under the policy, including but not limited to:
1) the right to appeal to the insurer or health care center under contract terms;
2) the right to an external appeal for certain managed care determinations as
specified in District of Columbia Statutes; and
3) the right to proceed to litigation against the insurer or health care center.
DOI does prohibit Sole Discretionary language and other types of Discretionary
Clauses in policy forms, and will request changes to the policy form. All lines of
insurance will be monitored for such practice and usage of Discretionary language or
clauses. Use of such language could cause delay or rejection in the form filing
process.
November 24, 2010
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Mandated Benefits
Virginia
• Effective July 1, 2010 group health insurance coverage
issued to a large employer must provide coverage for
mental health and substance abuse services
• The Bureau will require certain information to expedite
and facilitate the review and approval of forms
Administrative Letter 2010-4
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Mandated Benefits
Illinois
• All individual and group health insurance policies and
HMO contracts must provide coverage for the diagnosis
and treatment of autism for children under 21
• Increase in the maximum autism benefit from $36,000 to
$37,260 takes effect on January 1st
• Applies to policies and HMO contracts that are issued,
renewed, or modified on or after January 1 of each year
• Benefits provided under the autism mandate are in
addition to benefits required by the Illinois Serious
Mental Illness Mandate
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Mandated Benefits – Autism - Pending
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Connecticut SB 672
Iowa SF 64
Michigan SB 38
Mississippi SB 2757
New York AB 413
Texas SB 441
Washington SB 5059
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Trade Practices
Oklahoma
• No health benefit plan can deny a claim on the basis of
the insured's status as a victim of domestic violence and
that domestic abuse must not be considered to be a
preexisting condition
• The acts constituting the domestic abuse must be
reported to a law enforcement agency
Effective November 1, 2010
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Standardized Health Application
Illinois 50 Ill. Adm. Code 2030
• Creates standardized health insurance applications for
use by carriers offering health benefit plans in the
individual and small group markets.
• Carriers may not refuse to accept or to discriminate in
the processing of these standard health applications.
for a minimum of 60 days from the date of the earliest
signature. For the period of time that the information
contained within such application is current (minimum
of 60 days)
Effective January 21, 2011
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Market Conduct: Continuing Trends &
Challenges
Property & Casualty:
Market Conduct
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Timely Claim Handling
• In 20 instances, the Companies failed to conduct and pursue a
thorough, fair and objective investigation of a claim and persisted in
seeking information not reasonably required for or material to the
resolution of a claim dispute
• In 12 instances, the Companies failed to conduct and pursue a
thorough, fair and objective investigation
• In 8 instances the Companies persisted in seeking information not
reasonably required or material to the resolution of a claim dispute.
• The Companies did not take into consideration hand written notes and
previously submitted information confirming medical bills were
incurred
• The Companies sent repeated Documentation Requests for
information which was either in the claim file or not reasonably
required CA 5/10
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Timely Claim Handling
• In 29 instances, the Company failed to supply the claimant with a
copy of the estimate upon which the settlement was based. The
Company failed to document that a copy of the estimate is provided
to the insured.
• In 17 instances, the Company failed to document the basis of
betterment, depreciation, or salvage. The basis for any adjustment
shall be fully explained to the claimant in writing. The Company
failed to tender the total loss offer in writing.
• In six instances, the Company failed to provide written notice of any
statute of limitation or other time period requirement not less than
60 days prior to the expiration date.
CA 10/10
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Workers’ Compensation Claims
• Failed to comply with TDI-DWC or Commissioner
Order; Failed to timely pay income benefits to
injured employee; Failed to timely act on request for
reconsideration of a medical bill; Failed to accurately
report benefit data to TDI-DWC or accurately submit
benefit data by electronic data interchange
• Failed to sufficiently explain the reasons for the
reduction or denial of payment for health care
services to the injured employee; Failed to pay for
preauthorized medical services; Failed to timely pay
attorney fees TX 1/11
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Documentation
• Company failed to maintain all documents, notes and work
papers in the claim file.
• In one instance there was nothing in the file documenting the
reason that the claim was closed without payment.
• In one instance the dates of inspection and appraisal were not
documented in the claim file.
• In the third instance cited there were no activity log notes,
correspondence or other working papers in the file documenting
the details of pertinent events that took place on the file from
the date the claim was received until the date the claim was
closed.
CA 4/10
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Underwriting
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Notice of nonrenewal does not consistently state the specific
reason for termination, and rather contains language instructing
insureds to write to {Company} for an explanation of the adverse
underwriting decision. This issue may potentially affect any
{Company} PPA {Private Passenger Automobile} insurance
policyholder about whom an adverse underwriting decision is made
which results in the nonrenewal of the policy.
This issue was identified in the 1998 exam in the PPA and CMP lines
of business. The issue was raised again in 2002 in the exam of the
HO line of business. This practice was noted in the current
examination as affecting the PPA and HO lines of business.
CA 4/10
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Underwriting
• ... It was determined in a sample of twenty (20)
policies that the company cancelled seventeen (17)
policies for nonpayment of the first premium on a new
policy without giving the required fifteen (15) day
notice, in violation of Connecticut General Statutes,
Section 38a-343(A). CT 3/10
• failed to indicate on the notice the amount owed by the
insured. NY 11/10
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Disclosures
• The company failed to obtain a signed written rejection
of UM limits equal to the liability limits on the policy
• The companies' long form Notice of Financial Information
Collection and Disclosure Practices did not contain all of
the information required by this statute
VA 5/10
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Rating
• Use of rates that were not in accordance with the
Companies’ rate filings then in effect, failure to
document their applications of their filed schedule
rating plan, and failure to document their applications
of their filed commercial rating schedule and failure to
provide the reasons for applying schedule rating debits
or credits.
WA 11/10
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Recent P&C Fines
• Connecticut
1. $397,000 – December 2010
2. $101,000 – January 2011
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Missouri - $200,000 – February 2010
New York - $475,000 – January 2010
Texas - $221,000 – September 2010
Washington - $534,000 – November 2010
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Life & Annuities:
Market Conduct
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Suitability
• …failed to adequately supervise its field management and insurance
agents to prevent certain of its Respondent’s Wisconsin sales branch
offices and insurance agents from engaging in:
1. unsuitable annuity sales and replacements, improper annuity
marketing and sales practices, including initiating annuity sales
solicitations without disclosure that annuities were being sold
2. violations of do-not-call list restrictions for the purpose of annuity
sales solicitations
3. misrepresentations relating to annuity sales, and failing, through
the actions of its managers and agents, to cooperate with OCI
WI 7/10 ($1,500,000)
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Replacement – New York
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New York: Replacement and application processes. 2/10 ($1,900,000)
Did not present complete, accurate and/or timely Disclosure Statements
to applicants as required under Section 51.5(c) of Regulation 60. Did not
adequately process and resolve client complaints pertaining to the sale of
life insurance policies or annuity contracts as follows … (ii) Respondents
did not, in certain instances, provide their clients with detailed reasons in
writing for the denial of complaints.
Did not adequately process and resolve client complaints pertaining to the
sale of life insurance policies or annuity contracts as follows … (iii)
Respondents, in certain instances, permitted individuals whose
responsibilities included overseeing agents and approving sales
transactions to review and determine whether to deny or settle complaints
with respect to policies in which the reviewer had a financial interest in
the outcome of the complaint, thereby potentially compromising the
fairness and impartiality of the complaint handling process. 12/10
($2,000,000)
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Replacement
• The Company failed to provide clear notification to the
owners of newly issued replacement life insurance
policies and annuity contract of the right to return the
policy or contract within 30 days after the delivery
MD 9/10
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Advertising
• The examiners identified eight pieces of advertising for the
{annuity} product where the riders are advertised as a benefit of the
contract; however, there is no clarification provided to the agent or
the insured explaining that the riders are only available to
policyowners age 75 and under at the time of purchase
• The advertisement for the {annuity} highlights that “after 12 months
the client can cash out all or part of his money.” There is no
clarification on the advertisement to explain that if a cash-out over
the penalty-free withdrawal amount takes place in the first 14
years, the withdrawal will be subject to surrender or commutation
charges
CA 4/10
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Unfair Trade Practices
• Sold insurance policies to active duty services members
of the United States Armed Forces in violation of
Insurance §§ 700, 780, and 790
• Contained a side fund as defined by Military Sales
Regulation § 2695.24(n) and alleged that the side fund
did not comply with Military Sales Regulation
CA 12/10 ($275,000)
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Health:
Market Conduct
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Claims
• Failure to quickly inform consumers about appeals
decisions, the reason for such decisions or consumers'
rights for further appeals
• Failure to pay interest on past-due claims
• Insurer to correct violations involving health-care
appeals, claims handling and health-care provider
grievances
AZ 2/10
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Claims
• Failure to provide documentation or maintain adequate records
• Failure to follow complaint handling procedures
• Failure to timely acknowledge or act promptly upon communication
with respect to claims
• Anti-Fraud plan failed to include a description of the insurer’s plan
for anti-fraud education and training of its claim adjusters or other
personnel
• Anti-Fraud plan failed to acknowledge that the insurer or Special
Investigation Unit shall report all suspected fraudulent insurance
acts directly to the Division of Insurance Fraud electronically using a
digital reporting interface
FL 6/10
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Claims -Denials
• Unreasonably denying claims for acupuncture treatment
and denying acupuncture claims for certain conditions
without reliable supporting information or evidence
demonstrating that such treatment is not cost-effective
or clinically effective for such conditions.
WA 2/11
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Claims
• The HMO failed to notify primary care providers of the termination of
specialty referral services provider
• The HMO failed to notify the provider 90 days prior to termination if
unrelated to fraud, loss of licensures, or abuse
• The HMO failed to reimburse Health Care Practitioners the proper
negotiated rate.
• The HMO failed to complete and maintain a mental health expense ratio
form developed by the commissioner, and failed to make copies of the form
publicly available to an individual, enrollee or member upon request.
• The HMO failed to use a private review agent that held a certificate of
registration granted by the Commissioner at the time of utilization review.
• The HMO failed to include an expedited procedure for use in an emergency
case for purposes of rendering a grievance decision within 24 hours of the
date a grievance is filled with a carrier.
MD 10/10
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Documentation
• the examiners noted delays in receiving responses to
examination handbook interrogatories. In addition, the
examiners found that initial information was often
inadequate or incomplete and necessitated additional
information requests to obtain the documentation
required to perform a complete review. The Company
also requested time extensions when responding to
those follow-up requests
DE 11/10
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Recent Health Insurer Fines
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New York: Compliance issues associated with the administration of
the Healthy NY program - $750,000
California (DMHC): Failure to properly pay medical claims – 7
insurers - insurers required to provide restitution to health care
providers whose claims were underpaid or incorrectly rejected $5,000,000
Texas: Failure to pay clean claims in a timely manner and to
provide certain mandated coverages to insureds - $500,000
Connecticut: Failure to properly license and/or appoint agents;
failure to pay claims within 45 days; failure to pay claims without
conducting a reasonable investigation; failure to play claims as
required by mandated benefits in Connecticut; insufficient
documentation for regulators to review - $395,000
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What’s Up for the rest of 2011?
Legislative & Regulatory Initiatives = Continued focus on consumer protection
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Disclosures for the consumer
Fraud Prevention & Detection
Credit information use
Suitability
Senior protection
Control over health insurance rates
Discretionary clauses
Market conduct focus
• Timely claim handling
• Disclosures
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Examiners Checklists?
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Examiners Checklist for P&C?
• Timely claim handling
• Cancellation/Nonrenewal timeframes/required notices
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Examiners Checklist for L&A?
As states “roll-out” Model 275…
• Evidence of product specific training (agents cannot sell
unless PST is done)
• Evidence of supervision
• Evidence of transactional (the secondary) review
• How are “they” selling your products
• Evidence of that “reasonable basis”
Replacements? Are requirements met?
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Examiners Checklist for Health?
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Timely claim handling
Policy forms (do they conform to PPACA?)
Disclosures
Rates (are insurers using approved rates?)
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Questions