New York State
Insurance Department

            Superintendent of Insurance Neil D. Levin today announced that the Department has fined HealthNow New York, Inc. $500,000 for violations to the Insurance Law and Department Regulations, as well as for certain operational deficiencies. In addition to paying the fine, the company has agreed that no part of the imposed fine will be expensed to policyholders through future premium rates.

            "We are pleased that HealthNow has promptly addressed our concerns and we will continue to monitor their activity so their New York State policyholders are protected," said Levin.

            HealthNow, operating as Blue Cross Blue Shield of New York in Western New York and Blue Shield of Northeastern NY in the Capital District, violated the Insurance Law and Department regulations during the period from January 1, 1995 to February 1, 2000, by the following conduct:

• Systematically underpaying claims for physician outpatient psychiatric services;
• Violating the State’s Prompt Pay Law and failing to pay interest on the late payments as required under the statute;
• Using riders for chiropractic benefits and charging rates for such benefits which had not been approved by the Superintendent;
• Deleting thousands of valid claims from its computer system without having acknowledged, processed or paid them and without having maintained any permanent record of these claims; and
• Failing to facilitate the Department’s market conduct examination and aid the examiners in conducting the examine by not providing timely, accurate and complete responses to examiners request for data and other information.

            HealthNow has agreed that within 60 days of the approval of this stipulation, and every six months for a period of three years, they will submit a detailed written report to the Department describing remedial action to prevent recurrences of the violations and to remedy the violations and operation and management deficiencies noted in the examination reports.