Dover – Insurance Commissioner Matt Denn on Thursday fined Connecticut General Life Insurance Company, known as CIGNA, $125,000 – its second fine of the year – after it initially overcharged Delaware customers for prescription drug co-payments, then twice did not repay consumers after being so ordered.

 

“This is a case where we told CIGNA that it was overcharging some of its customers for drug co-pays and that it should stop overcharging and send refunds to customers it had overcharged,” Commissioner Denn said. “A few months later, we determined CIGNA was still doing it wrong and hadn’t refunded customers, so the company was fined. Recently, we figured out CIGNA still had not complied and still had not refunded customers, so the company is being fined again and ordered – again – to refund customers. And if, in the future, actions like this continue, I will not hesitate to continue fine and penalize CIGNA if necessary.”

 

Following is a timeline of the case:

• In 2006, CIGNA increased the co-pay for 90-day prescriptions, even though the co-pay amounts were set in CIGNA’s contracts with employers whose employees were being covered. CIGNA said it needed to make the change to comply with a state law mandating that mail-order and locally-filled prescriptions be charged the same. Commissioner Denn determined CIGNA was interpreting the law improperly and, moreover, that the company could not change its co-pays after contracts had been signed, no matter the reason.

• A department bulletin was sent to all insurance companies in September 2006 clarifying the issue (without naming CIGNA) and instructing any company that had wrongly raised co-pays for 90-day prescriptions to refund their customers.

• In April 2007, CIGNA was fined $25,000 when it was found that the company had not changed its co-pays and had not refunded its customers. The company promised at that time it would comply with the Commissioner’s orders.

• This summer, CIGNA was again found not to have changed its co-pay practice or refunded its customers. 

In an order issued Thursday, Commissioner Denn fined the company $125,000 – the highest fine possible under Delaware law – and set forth a list of requirements, including refunding the overcharged customers and reporting to the Department of Insurance the names and check numbers for all refunds made. Per the order, the fine will be reduced to $50,000 if all requirements are met by January 1, 2008.

 

“In the two and a half years that I have served as Delaware’s Insurance Commissioner, I have had to take legal action against a number of insurance companies for violations of the law, regulations, or contractual duties,” Commissioner Denn wrote in the order against CIGNA. “But until this case, I have not seen a company simply ignore the sanctions imposed upon it as a result of one of those legal actions.  I recognize that CIGNA now says that it will try to make all of its policyholders whole, but I will not ignore the fact that CIGNA behaved for months as if it were above the law.”

 

In a footnote to the order, Commissioner Denn warned CIGNA’s customers that the company has said it plans to raise co-pays for 90-day prescriptions when contracts come up for renewal, which is a matter that would be between CIGNA and the companies it provides health coverage for.

 

“CIGNA has indicated that the way in which it will alter its contracts upon renewal is to raise copayments for mail order prescriptions.  Although this action by CIGNA is not illegal, it is unfortunate, and CIGNA customers should be aware that CIGNA is contemplating this significant copayment increase when they are making decisions about which insurance carriers they will do business with,” Commissioner Denn wrote.