In a wide ranging re-evaluation of disability claims covering its insureds in California, Connecticut, Maine, Massachusetts and Pennsylvania, Cigna Corporation may pay up to $77 million in past disability income insurance claims. According to a statement by Cigna yesterday, "We are voluntarily agreeing to review an isolated subset of past long-term disability claims files from 2009 and 2010 (also from 2008 in California only) under updated standards," (Law360, subs. req.).
In 2009, a market conduct action was initiated alleging certain Cigna companies may have violated federal and state insurance trade practices laws. Cigna came up with a plan to resolve any disputes, and the parties -- which included the insurance departments of all five states listed above -- agreed to settle the market conduct action. As part of its statement yesterday, Cigna clarified that the "regulatory settlement agreement grew out of a normal cycle of review by state regulators."
As part of the remediation plan, Cigna agreed to:
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Establish an internal disability claim quality assessment team;
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Report on the reassessed claims involved in the remediation plan to all five insurance departments for a period of two years;
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Compensate the five states for costs incurred in the monitoring process;
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Revise its policies to ensure compliance with Social Security Disability Income benefits laws, the selection of evaluation personnel, and the gathering of medical information; and
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Pay certain fines and administrative fees to the departments.
Barger & Wolen works with clients along all insurance lines on market-conduct exams and reviews before the California Department of Insurance. For more information click here.
