Bloomfield insurer Cigna has agreed to pay a $2 million fine to the state of New York after being accused of violating that state’s insurance law.
According to N.Y. Department of Financial Services (DFS) Superintendent Maria T. Vullo, Cigna illegally sold stop-loss insurance and unapproved health insurance policies that would otherwise have been part of New York’s small-group market.
Cigna is licensed as a life insurance company in New York, but does not have fully insured health insurance coverage products approved to sell to small groups in New York, Vullo said.
A targeted examination by DFS found that Cigna sold 81 group health insurance policies in violation of New York insurance law.
Stop-loss insurance, which limits coverage to protect against catastrophic claims, may be sold only to large group employers that self-fund underlying medical expenses in order to mitigate liability for unexpectedly large losses, Vullo said.
In the consent order signed by Cigna, New York alleged that Cigna improperly sold such policies outside of New York to New York-based small groups whose employees work in New York.
“By deliberately choosing to write New York risks outside of New York, Cigna’s actions harmed New York’s community-rating program for small group employers,” Vullo said in a statement. “Cigna cherry-picked risks, which may have improperly induced forum shopping in the New York small-group market.”
In a statement, Cigna said: “Our objective is to improve the health and health care affordability in the communities we serve. We have agreed with the New York Department of Financial Services to resolve this matter and would welcome the opportunity to work with the Department and insurers in developing industry guidance regarding the scope of New York’s small group law in order to ensure a level, competitive playing field.”
