Bangor, MECigna has agreed to settle wrongly denied disability claims with a variety of states. The states alleged three Cigna-operated companies improperly handled insurance claims. Improperly denied insurance claims can lead to bad faith insurance lawsuits against insurance companies.
Maine Insurance Superintended Eric Cioppa announced on May 22, 2013, that a settlement was reached with Life Insurance Company of North America, Connecticut General Life Insurance Company and Cigna Health and Life Insurance Company regarding allegations that the companies did not properly assess disability insurance claims. According to a press release issued by Cioppa, the companies set aside $29 million for claims that are still open and $48 million in reserves in case benefits that were previously denied are overturned.
The companies have also agreed to change the claims handling process, provide a program so that the new claim procedures can be applied to wrongly denied claims and pay fines of more than $1.6 million. Other states involved in the settlement were California, Connecticut, Massachusetts and Pennsylvania.
According to documents from the Maine Bureau of Insurance, an investigation into the claim handling practices of the three companies began on September 15, 2009. Among concerns were that the companies’ claim handling practices did not conform with the Unfair Methods of Competition and Unfair and Deceptive Acts and Practices in the Business of Insurance Model Act (1972), and the unfair trade practices acts of Maine and Massachusetts.
Regulators said Cigna denied claims that should have qualified for payment of benefits, including new and ongoing claims.
“The state examinations showed that these three CIGNA companies were lax and not using available information to appropriately process disability income and insurance claims,” Pennsylvania Commissioner Michael Consedine said in a news release.
Unfairly denied insurance claims is a common complaint among those who take issue with insurance companies. Allegations have been made that claims are unreasonably delayed or denied through highly unethical means, including requiring duplicate paperwork being sent, claiming required paperwork was not received, or ignoring or contracting the medical opinion of the claimant’s medical professional.
When insurance companies have been found to practice bad faith insurance, claimants may be able to file a lawsuit or an appeal.
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