Cigna Sets Aside $77 Million In Long-Term-Disability Settlement With Regulators In Five States

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Cigna Corp. set aside $77 million to cover potential claim payments as part of a settlement with insurance regulators in five states over the company’s practices in handling long-term disability claims, the Connecticut Insurance Department said Wednesday.

“This regulatory action is intended to provide long-awaited relief for consumers who have a right to expect that their carrier will make good on contractual promises,” said Connecticut Insurance Commissioner Thomas B. Leonardi, head of the state Insurance Department.

The settlement was with California, Connecticut, Maine, Massachusetts and Pennsylvania. Cigna’s life insurance subsidiaries in those states are re-evaluating claims and have set aside $48 million in reserves for possible additional benefits as well as an additional $29 million for claims that are currently open.

“As regulators, we hold carriers accountable for adhering to laws and regulations of each state in which they conduct business,” Leonardi said. “This settlement resulted from market conduct exams and encompassed issues of serious concern. It is a solid example of regulatory cooperation in protecting the policyholders of Connecticut and other jurisdictions.”

The life insurance subsidiaries will be required to improve claim procedures and to benefit current and future policyholders, according to the Insurance Department.

At issue is Cigna’s determination of whether a person should become eligible, or remain eligible, for long-term disability payments. Regulators said Cigna was denying initial claims and ongoing claims that should have qualified for payment.

Cigna spokeswoman Amy Turkington said, “This regulatory settlement agreement grew out of a normal cycle of review by state regulators. As part of the settlement we are voluntarily agreeing to review an isolated subset of past long-term disability claim files from 2009 and 2010 — also from 2008 in California only — under updated standards. The enhanced standards are related to our procedures for gathering information and documenting decisions in our claim files and engagement between our clinical staff and health care professionals who provide care to our customers.”

The Bloomfield-based insurer will take part in a 24-month monitoring program conducted by insurance regulators in all five states with random sampling and on-going consultation, the state Insurance Department said. Cigna agreed to pay fines of $1.675 million, of which Connecticut will receive $150,000 to monitor the company’s compliance.

As part of the settlement, Cigna agreed to apply enhanced claims procedures to long-term disability claims that were denied or terminated, and which should have been approved or continued.

Turkington said, “As state standards for claims procedures have evolved over time, we have proactively and voluntarily updated our processes, for example, by more than doubling our clinical staff, hiring additional claim managers and expanding our training and audit programs.”

Cigna policyholders who have questions about having long-term disability claims re-evaluated are asked to call 855-625-5518.

About Matthew Sturdevant

Full-time staff journalist at The Hartford Courant and magazine freelancer with a master's degree in writing from Dartmouth. My work has appeared in The Los Angeles Times, The Chicago Tribune, Taiwan News, The Baltimore Sun and many other news sources. My blog has been referenced by Politico.com, the Kaiser Family Foundation, the Georgetown Law Library and a number of organizations in healthcare and business. Sturdevant’s blog is "a well-written wealth of ideas," said The Donald W. Reynolds National Center for Business Journalism, (businessjournalism.org, May 18, 2011). I have experience writing for newspapers, magazines, Web sites and blogs as well as shooting and editing video. I made regular appearances on news-talk radio and on the NBC affiliate station in Corpus Christi, Texas. I made occasional appearances on the Fox affiliate in Connecticut promoting Hartford Courant articles.

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