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Insurers to Face Up to $5,000 for Failing to Pay Claims Promptly

Superintendent of Insurance Neil D. Levin today announced that the Department is intensifying the pressure on insurers who repeatedly violate the state’s Prompt Pay Law. HMOs and insurers who have repeatedly failed to pay their claims on time will face fines of up to $5,000 per violation, the maximum fine permitted under the law.

"We are sending a loud and clear message to the industry that prompt pay violations will not be tolerated," said Levin. "When HMOs and insurers fail to pay claims on a timely basis, consumers and providers suffer. HMOs and insurance companies must be held accountable for their actions. Companies must strengthen their claims processing capabilities, and boards of directors and senior management must be more focused on their company’s compliance with the Prompt Pay Law."

Levin outlined the stiffer penalties in the Department’s Circular Letter #6. In addition to imposing stiffer penalties, the Department is expanding the reporting requirements for insurers and HMOs to include information on the total number of claims it processes annually.

The Prompt Pay Law, which went into effect in January 1998, requires all health insurers to pay undisputed health insurance claims within 45 days of receipt – ensuring the timely payment of patient and provider claims. The Department recently levied its fourth round of fines totaling $86,100.

The fourth round of fines by company are as follows:


Amount of Fine

Anthem Health & Life $1,200
*Capital District Physicians Health Plan, Inc 1,900
CarePlus LLC 2,800
*CIGNA Healthcare 1,650
Community Premier Plus 1,200
*Empire Blue Cross Blue Shield 1,500
Health Care Plan of New York 20,500
*Healthnow 1,700
*HIP of Greater New York 1,650
Independent Health Association 1,400
*Kaiser Foundation 1,500
*MDNY Healthcare 1,600
*NYLCare (Aetna US Healthcare) 3,250
*Oxford Health Plans 28,650
Physicians Health Services 3,300
*Prudential Healthcare Plan 1,400
*U.S. Healthcare 9,800
*Vytra Health Services 1,100
TOTAL $86,100

The companies with an asterisk are repeat offenders – meaning that they have been fined for prompt pay violations in the past. These companies acknowledge that they failed to pay claims promptly and have agreed to pay fines imposed by the Department and to put corrective measures in place to avoid future violations. They are also required by law to pay interest on the late claims. Under the law, the interest must be paid at the greater of 12 percent per year, or the corporate tax rate that is set by the Commissioner of Taxation and Finance. In addition, the Department is requiring these 18 companies to review all overdue claims and payments made between September 1, 1999 and December 31, 1999 and to report how much interest was paid on those claims by March 1, 2000.

The Department has handled over 40,000 prompt pay complaints since the law went into effect in January 1998. In 1999, the Department fined insurers more than $266,000. Overall, the Consumer Services Bureau handled more than 60,000 complaints last year from both consumers and providers on various insurance issues. Consumers and providers with prompt payment complaints can call the Department’s toll-free hotline at 1-800-358-9260.

Department of Financial Services


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