CIGNA To Pay $1.6 Million in Fines/Fees and up to $70 Million to Denied Policyholders
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 comes after individual examinations into the insurance company’s claims handling practices by the California, Connecticut, Maine, Massachusetts, and Pennsylvania state insurance departments. As a result, the CIGNA companies are now reviewing past claims that were improperly handled in California from January 1, 2008 to December 31, 2010.
“This is a huge win for California long-term disability consumers. We have seen too many cases of wrongful denials in recent years and insurance companies delaying the claims process. For people suffering from a long-term disability, it’s essential to their financial security that claims are handled quickly and fairly,” says Frank N. Darras, America’s top disability insurance lawyer.
Several companies were involved in the settlement, including CIGNA Health and Life Insurance Company (formerly known as Alta Health and Life), and Connecticut General Life Insurance Company, Life Insurance Company of North America. They have set aside $77 million for estimated payments to wrongfully denied policyholders nationwide. They are also required to pay a $500,000 penalty to the California Department of Insurance and $150,000 to reimburse the department for the cost of ongoing monitoring that is required under the settlement agreement.
“This settlement will help thousands of policyholders whose claims were not handled properly and who were wrongfully denied in the past. It is a welcome relief and one worth celebrating! It is also a win for future policyholders who might have to file a claim. This agreement should also help currently disabled insureds by adding additional good faith pressure to handle claims promptly and fairly, while putting a national spotlight on Cigna’s claim handling ,” says Darras.
According to Jones, insurance department officials found that 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.
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
- Undergo a re-examination upon completion of the monitoring period
- Pay fines and administrative fees totaling $1,675,000 to the five lead states
“Any person who had their claim denied from January 1, 2008 to December 31, 2010 is entitled to have their claim reviewed. It is advised they seek help from a top disability insurance lawyer or firm to ensure their claim gets a fair review,” says Darras.