Insurance Commissioner announces multi-state settlement for improper disability claim handling practices case against major insurer
News: 2013 Press Release
SACRAMENTO - California Insurance Commissioner Dave Jones announced that he, along with four other state insurance regulators, has reached a settlement with the CIGNA group over claims handling practices for long-term disability insurance. The settlement is the result of individual examinations of the Pennsylvania based insurer's claims handling practices by the insurance departments of California, Connecticut, Maine, Massachusetts, and Pennsylvania.
"This case involves long-term disability claims and is an important win for California consumers," said Jones. "When people are injured or disabled, it is particularly important that their claims are handled quickly and fairly. The agreement with CIGNA puts into place more effective claim handling procedures, which will ensure consumer protection for policyholders."
During the claims examinations insurance department officials found claim handling irregularities, such as not giving due consideration to the medical findings of independent physicians, discounting information provided by Social Security Disability decisions, and not giving appropriate consideration to workers compensation records.
The CIGNA companies are now re-evaluating certain claims and have set aside $77 million for projected payments to policyholders potentially nation-wide whose claims were not handled properly. CIGNA is also paying a $500,000 penalty to the California Department of Insurance and $150,000 to reimburse the department for the cost of ongoing monitoring required under the settlement agreement.
Under the settlement agreement, the companies are required to:
- Enhance claim procedures to improve the claims handling process to benefit current and future policyholders.
- Establish a remediation program in which the companies' enhanced claim procedures will be applied to certain previously denied or adversely terminated claims for residents of states whose insurance commissioners also signed the settlement agreement.
- Participate in a 24-month monitoring program conducted by the insurance departments of the five lead states in the action involving random sampling and ongoing consultation.
- Undergo a re-examination upon completion of the monitoring period.
- Pay fines and administrative fees totaling $1,675,000 to the five lead state states, which are California, Connecticut, Maine, Massachusetts, and Pennsylvania.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $259 billion in premiums annually in California. In 2014 the California Department of Insurance received more than 175,000 calls from consumers and helped recover over $54 million in claims and premiums. Please visit the Department of Insurance web site at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.HELP or 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.