Maine settles with Cigna companies over disability income claims

Posted May 22, 2013, at 3:41 p.m.

Maine has reached a major multi-state settlement with three companies operated by insurance company Cigna over how the firms handled claims for disability income insurance.

Maine Insurance Superintendent Eric Cioppa announced Wednesday that Maine has settled with Life Insurance Company of North America, Connecticut General Life Insurance Company, and Cigna Health and Life Insurance Company, formerly known as Alta Health and Life, over the claims. Maine worked with insurance regulators in California, Connecticut, Massachusetts and Pennsylvania.

“Coordinated examinations by Maine and other states showed that these three Cigna companies were not using available information to appropriately process disability income insurance claims, and that their claims handling practices needed improvements,” Cioppa said in a press release. “The companies are now re-evaluating certain claims and have so far set aside $48 million in reserves in the event additional benefits need to be paid. They have also set aside an additional $29 million for presently open claims.”

Cioppa outlined the requirements of 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 sign the settlement agreement.

• Participate in a 24-month monitoring program conducted by the insurance departments of the five states involving random sampling and on-going consultation.

• Undergo a re-examination upon completion of the monitoring period.

• Pay fines and administrative fees totaling $1,675,000. Maine will receive $175,000 of the total fine.

The companies have set up a dedicated phone line for policyholders with questions about the claim re-evaluation process at 1-855-625-5518. A copy of the full settlement agreement is available at maine.gov/pfr/insurance under “featured links.”

Consumers seeking additional assistance are asked to call the Maine Bureau of Insurance toll-free at 1-800-300-5000.

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