California and three other states have settled with CIGNA over claims handling practices for long-term disability insurance. The settlement is the result of individual examinations by the insurance departments of Calif., Conn., Maine, Mass., and Penn.
Insurance department officials cite claim handling irregularities, such as not giving enough consideration to the medical findings of independent physicians, workers compensation records, or Social Security Disability decisions.
Cigna is re-evaluating certain claims and has set aside $77 million to pay policyholders whose claims were handled improperly. CIGNA is paying a $500,000 penalty to the California Dept. of Insurance. The company is also paying $150,000 to reimburse the department for the cost of ongoing monitoring required under the settlement agreement.
Cigna must do the following under the settlement agreement:
• Improve the claims handling.
• Apply enhanced claim procedures to certain previously denied or adversely terminated claims.
• Participate in a 24-month monitoring program, conducted by the insurance departments, involving random sampling and ongoing consultation.
• Undergo a re-examination upon completion of the monitoring period.
• Pay $1.7 million in fines and administrative fees to the five states involved in the settlement.
