Cigna Health and Life Insurance Co. has been slapped with a $2 million fine for allegedly violating state insurance law.
The state of New York claimed that Cigna illegally sold stop-loss insurance and unapproved health insurance policies.
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Stop-loss insurance limits claim coverage to protect against numerous catastrophic claims, according to a report by the Watertown Daily Times
. Stop-loss insurance can only be sold to large-group employers that self-fund medical expenses in order to limit liability in case of an unusually high number of claims.
Cigna allegedly sold 38 stop-loss policies to small-group employers in violation of state law, the Daily Times
“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,” said Maria T. Vullo, the state’s financial services superintendent. “Cigna cherry-picks risks, which may have improperly induced forum shopping in the New York small-group market.”
The New York Department of Financial Services said that it had received complaints about Cigna and had moved to investigate. The department said that it requested that Cigna stop selling illegal stop-loss policies pending an inquiry, according to the Daily Times
. While Cigna initially agreed, the department claimed that it later resumed selling the policies.
Cigna told the Daily Times
in an emailed statement that it had agreed to resolve the issue.
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