Byline: Patricia Daddona
Mar. 30--Customers of an insurance company that denied claims by blaming pre-existing health conditions will get restitution, the state's insurance commissioner announced Thursday.
Commissioner Susan Cogswell also said Thursday that her department will continue investigating Assurant Inc.'s practices, which she said might be 'just the tip of the iceberg' for the company's customers.
The firm, based in Milwaukee, issues health insurance policies through subsidiaries Time (formerly Fortis), Union Security and John Alden Life insurance companies.
'We just did a small sampling of policies, and based on that we believe there are other policy holders that have claims that have been unjustly denied,' said Cogswell.
A health problem that existed before the patient obtained an insurance policy -- a pre-existing condition -- can mean that the new policy might not cover costs of treating the condition.
According to Mark Franklin, director of the department's consumer services' division, the department closely reviewed 547 of the companies' 1,279 cases. It then randomly selected 39 cases representing $220,000 in reversed claim denials and more than $57,000 in interest.
Franklin found that most of the claims he reviewed involved language about pre-existing conditions 'that were incorrectly applied or delayed.' In some cases, a company would tell the policyholder it was denying a claim it had not yet investigated, he stated in a department memo.
Some catastrophic illnesses resulted in recovered claims totaling tens of thousands of dollars, and one totaled $93,049, plus $29,323 in interest.
In one case, a patient's claim was denied four years ago based on an incorrect conclusion that a pre-existing condition prevented coverage, Franklin states. The reversed decision resulted in a payout of $1,122 and $42.17 in interest.
In another case, a policyholder was denied a claim for treatment for chondromalacia, also known as water on the knee, and joint pain in the lower leg. Three months later, the firm admitted that medical records about whether the condition was pre-existing were unclear. It paid out more than $5,000, plus $63 in interest.
Cogswell's settlement requires the insurance companies to:
--Repay policy holders, with interest, who had claims wrongfully denied based on an alleged pre-existing condition;
--Submit to a compliance audit for 2001 through 2007;
--Use more medical personnel in reviews of claims early and clarify record-keeping
--Educate customers about how to appeal denials.
As part of the agreement, the company admits no wrongdoing, and the department reserves the right to pursue other issues.
Attorney General Richard Blumenthal, whose office also received complaints, said the insurance department should have produced an audit and imposed penalties on the company.
'Assurant added insult to illness, compounding consumers' struggles with grave illnesses, cancer and other devastating diseases, with fears of losing their homes and possessions to pay for life-saving treatment that Assurant promised, but failed to pay,' he stated.
However, Cogswell said, 'it would be premature to determine the fine until we know how serious the problem is. My primary aim is to make sure that the policyholders that have unjustly denied claims get restitution with interest.'
Assurant spokesman Rob Guilbert said the company serves 1.3 million people in 43 states and last year paid more than $1.3 billion in claims nationwide. The firm 'agrees with' the insurance department's stipulations and regularly cooperates in market conduct reviews, he said. The firm has been in business since 1892.
'We're glad to be working with them on this,' Guilbert said. 'We've signed this agreement and we do work very hard to make sure our claims process is fair and equitable and consistent with state laws and industry standards. And we're always striving to improve that process.'
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