Health Insurer Withdraws from Market, Will Pay up to $5 Million in Agreement with State Regulators
Under deal with Division of Insurance, thousands of claims may be reconsidered by HealthMarkets, Inc.
BOSTON - August 31, 2009 - The Patrick Administration's Division of Insurance announced today that it has reached an agreement with HealthMarkets, Inc. that includes up to $5 million in payments from the company. In addition, HealthMarkets will reconsider many health care claims that it has denied since 2006.
HealthMarkets, Inc. has also agreed to cease writing any new health insurance coverage in Massachusetts through its insurance company subsidiaries after September 30, 2009. HealthMarkets' insurance company subsidiaries - The MEGA Life and Health Insurance Company, Mid-West National Life Insurance Company of Tennessee, and The Chesapeake Life Insurance Company - currently provide health coverage to 27,000 customers in Massachusetts.
Under the agreement , HealthMarkets will pay $2 million to the Commonwealth, and will also be subject to payment of $3 million more if it does not adhere to provisions in the settlement. The company previously paid out over $850,000 in claims denied prior to August 2006 for customers who did not understand or weren't fully aware of the limitations of their coverage.
"Consumers have expectations that their premium payments are going to deliver a certain standard of coverage," Insurance Commissioner Nonnie S. Burnes said. "We expect all companies doing business in Massachusetts to properly explain the features of their
coverage and make sure that consumers are not misled about limitations that may apply to the coverage."
Commissioner Burnes and her staff have monitored HealthMarkets' actions closely over the past two-and-a-half years in the health insurance market under an agreement signed in December 2006, which included the $850,000 in claim payments. Under the new agreement, HealthMarkets has agreed to reconsider certain additional claims denied through August 2009, giving its customers the potential for reimbursement for previously denied claims.
"As health insurance costs have skyrocketed, families have looked for plans that provide coverage for lower costs. Unfortunately, in some cases coverage does not meet reasonable expectations, and in some cases companies do not make consumers aware about limitations to coverage," said Barbara Anthony, the Undersecretary of the Office of Consumer Affairs and Business Regulation. "Consumers need to research a plan thoroughly before signing on, and should be wary of products that seem too good to be true."
This agreement does not impact the coverage of the existing Massachusetts residents covered under HealthMarkets' policies. The Division expects the company to honor policies fully for the duration of policyholders' coverage. The agreement also does not affect non-health plans and HealthMarkets will continue to offer other types of insurance in Massachusetts.
The Division of Insurance conducts the Patrick Administration's regulatory oversight of the health insurance industry by consistently monitoring the industry and protecting consumers' interests. HealthMarkets customers who have questions about the settlement, or want more information about their coverage, can call the Division of Insurance at (617) 521-7794.