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Cigna pays $1.2M in fines, refunds
Cigna Healthcare of North Carolina (NYSE: CI) agreed to pay more than $1.2 million in fines, refunds and credits to settle allegations that it violated regulations related to claims processing. The fine is the second-largest ever levied against an insurer by North Carolina regulators as a result of a routine examination of its market conduct.
The settlement arose out of a routine North Carolina Department of Insurance market exam of the company that began in 2005 and reviewed activity from 2002 through 2004, reports the Triangle Business Journal. The department found a variety of violations, including widespread failure to maintain adequate records and failure to calculate premium rates in accordance with rating methodology. In addition, Cigna failed to process claims in a timely fashion and failed to send acknowledgment letters within three business days for member grievances.
The state's review also found that Cigna undercharged more than $1.3 million at the same time as when the overcharges occurred. Those charges were factored into the credits and refunds Cigna issued, according to Insurance and Financial Advisor.
"We apologize for the problems, and we are working closely with the Department of Insurance to rectify this situation," Cigna said in a statement. "Cigna has changed its internal documentation processes to ensure that this will not be an issue moving forward."
Cigna said customers were never charged higher premiums than they had agreed to pay. Instead, "the errors took place in the calculation of the rate before it was presented to the employer." As a result of its errors, some clients ended up paying less overall than they should have. However, "those customers will not be asked for additional monies," notes the News and Observer.
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