For Immediate Release - June 04, 2007

Massachusetts Settlement Addresses Concerns Regarding Health Markets, Inc. Claims Handling

Massachusetts Settlement Addresses Concerns Regarding Health Markets, Inc. Claims Handling

BOSTON - Monday, June 4, 2007 - Insurance Commissioner Nonnie S. Burnes today announced an amendment to a settlement agreement of the claim handling practices of two health insurers, The MEGA Life and Health Insurance Company, Mid-West National Life Insurance Company of Tennessee and the Chesapeake Life Insurance Company - all owned by Health Markets, Inc. The settlement agreement requires all Health Markets, Inc. companies to re-assess certain claims going back to January 1, 2002.

The limited scope market conduct examination identified several claims handling practices of concern to the Massachusetts Division of Insurance, including:

  • failure to resolve claims in a timely manner;
  • failure to respond to claim-related complaints and grievances;
  • failure to provide adequate explanations relating to claim denials and partial payments;
  • failure to provide adequate information regarding covered expenses applied to deductibles;
  • failure to provide adequate explanations for non-covered portions of claims; and
  • failure to pay benefits under plan certificates and riders fairly and equitably.

The settlement agreement requires the Health Markets, Inc. companies to:

  • offer, in writing, to reassess over 125,000 specific claim denials since January 1, 2002;
  • revise its explanation of benefits to disclose complete information to insureds regarding the type and amount of applicable deductibles;
  • review lapsed and cancelled certificates to determine if premium refunds were processed in a timely and appropriate manner; and
  • institute comprehensive claim adjudication procedures.

"The agreement required significant changes in the Health Markets, Inc. companies' marketing and claim handling practices, and our agency will continuously monitor the companies' compliance with the terms of the agreement. In addition, consumers will have their claim denials reassessed under the review of the DOI," said Commissioner Burnes.

The complete examination report and the settlement agreement can be found online at