New York State Fines Cigna for Insurance Violations

New York state has fined Cigna Health and Life Insurance Co. $2 million on accusations that it violated state insurance law.

The state said the Bloomfield, Conn.-based insurer illegally sold stop-loss insurance and unapproved health insurance policies.

Stop-loss insurance, policies that limit claim coverage to protect against numerous or catastrophic claims, may be sold only to large group employers that self-fund underlying medical expenses to reduce liability for losses due to an unexpected number of claims, New York officials said.

“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 state Financial Services Superintendent Maria T. Vullo. “Cigna cherry-picked risks, which may have improperly induced forum shopping in the New York small-group market.”

In an emailed statement, Cigna said it agreed with New York officials to resolve the matter.

The Department of Financial Services said it received complaints about Cigna’s practices and requested that it stop selling the illegal stop-loss policies pending a state inquiry.

The company initially agreed but later resumed selling the policies in question, the agency said.

Cigna is licensed as a life insurance company in New York and is authorized to write life, accident, and health insurance in New York, including stop-loss insurance. Cigna does not have fully insured health insurance coverage products approved to sell to small groups in New York.

The state said Cigna sold 81 group health insurance policies in violation of New York insurance law. They include 38 stop-loss insurance policies to New York small groups seeking to self-insure and 43 fully insured health insurance policies to small groups as if they were selling to non-New York small groups.