Major health insurer slapped with $1.8mn in fines

A top insurer agreed to pay $4.5mn in fines and consumer restitution after an investigation into its questionable business practices.

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A multistate market conduct investigation of national health carrier Humana Insurance Co. ended Friday when the insurer agreed to a $4.5mn settlement and a change in business practices.

The investigation was launched in 2012 when a small employer filed a complaint with the Missouri Department of Insurance’s consumer affairs division. Missouri was joined in its efforts by insurance regulators in Mississippi and Wisconsin, and while details of the investigation remain confidential, a department document reveals the regulators looked into Humana activities from Jan. 1, 2001 – Oct. 31, 2011.

Investigative efforts uncovered that Humana was requiring some small business clients to purchase a group life insurance product alongside small group medical insurance.

Humana was discovered to have implemented the same practice in 10 states, including Alabama, Arkansas, Georgia, Mississippi, Montana, North Carolina, Tennessee, Utah and Virginia.

In the settlement, Humana agreed to pay $1.8mn in fines for its behavior. The insurer will also establish a $2.7mn consumer restitution pool, which will provide refunds for employers who were required to purchase Humana’s group life product.

Humana will also make business reforms, including adding more staff to oversee compliance and regulatory functions, and notifying both small group clients and insurance agents that the additional purchase of group life is not required for group health sale.

Independent agents appointed to sell Humana products will also receive a notice from the company, reading:

“As a reminder—Humana has no requirement that a small employer group must purchase small group life insurance with small group medical insurance.

Although an employer may choose to voluntarily purchase Humana small group life insurance when it purchases small group medical insurance, no employer must purchase small group line insurance when it purchases small group medical insurance.”

Missouri Insurance Director John Huff announced the settlement Friday, and celebrated the investigation as a reaffirmation of consumer freedom.

“Policyholders should be able to choose individual insurance products without insurers bundling products together,” Huff said. “I am pleased our team was able to collaborate on a settlement with multiple states to benefit consumers.”

The fees paid by Humana will go towards general revenue and the Missouri State School Fund, the department said.

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