HealthMarkets Agrees To Pay $20M To Settle Multistate Investigation

Main Category: Health Insurance / Medical Insurance
Also Included In: Medical Malpractice / Litigation
Article Date: 23 Jul 2008 - 6:00 PDT

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HealthMarkets, a health insurer that primarily sells coverage to the self-employed, on Monday agreed to pay $20 million to settle violations found by regulators in 36 states, USA Today reports. In January, state regulators, led by investigators in Alaska and Washington state, released the details of an investigation into the company's practices from 2000 to 2005. Investigators found that HealthMarkets did not properly train its sales agents and that the agents did not always fully disclose the policies' limits to consumers. According to USA Today, the insurer sells many plans that "pay only limited amounts toward medical care." The investigators also determined that HealthMarkets did not always promptly pay for medical services.

The settlement does not require the insurer to review complaints or issue refunds, but in addition to the fine, HealthMarkets must establish a toll-free hotline that members who purchased coverage before August 2005 can call to receive additional information about their coverage. The fine is one of the largest of its kind. Washington Insurance Commissioner Mike Kreidler said, "The severity of their actions certainly warranted that level of penalty. They hurt a lot of people." Since 2002, the company has been fined by at least seven states and has faced lawsuits from dozens of policyholders.

According to USA Today, if HealthMarkets does not correct its flawed practices, the company could face additional fines of up to $10 million. HealthMarkets says the company has made numerous changes since 2005, including contacting all new members to confirm that they understand their plan and improving training for sales agents. HealthMarkets CEO Phillip Hildebrand in a statement said that during the investigation the insurer worked closely with regulators, adding that the company is "committed to serving the health insurance needs of individuals, families, the self-employed and small businesses in a fully compliant manner" (Appleby, USA Today, 7/22).

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