New York State
Insurance Department

DEPARTMENT FINES COMMUNITY HEALTH PLAN $1 MILLION
FOR INSURANCE LAW VIOLATIONS

             Superintendent of Insurance Neil D. Levin today announced that the Department has fined Community Health Plan $1,000,000 for violations of the New York State Insurance Law. These violations occurred during the period from January 1, 1994 to December 31, 1998.

            According to a stipulation executed in conjunction with the fine, the company violated the Insurance Law by the following conduct:

1. Violation of certain Insurance Law provisions related to the "prompt payment" of claims by:

• Failing to make payments to claimants within the 45 day time limitation;
• Failing to deny claims or request additional information within 30 calendar days of receipt of the claim;
• Failing to pay interest on over 4,600 claims in which the interest amount was more than two dollars.

2. Violation of the certain Insurance Law provisions related to the Board of Directors investment     responsibilities by:

• Failing to seek approval either from its Board of Directors or responsible committee prior to making certain loans and investment transactions.

3. Violations of certain Insurance Law provisions related to transactions with its parent company by:

• Failing to maintain its accounting books and records so as to clearly disclose the nature and details of services that were performed by its parent, Kaiser Foundation Health Plans; and
• Failing to seek the Superintendent’s approval prior to entering into an investment arrangement with parent, Kaiser Foundation Health Plans, and
• Failing to have a written agreement specifying the terms of the arrangement.

             In addition to paying the fine, the company stated that the interest on late claims had been paid and they confirmed their compliance with the requirements of the Law during the completion of their market withdrawal. Community Health Plans announced their withdrawal from the northeast region, which included New York State in 1999.