The Missouri insurance department has sued Central United Life Insurance Co. for allegedly dodging claims from clients with cancer.
The Missouri insurance department has sued Central United Life Insurance Co. for allegedly dodging claims from clients with cancer.
The suit against the Little Rock, Ark.-based carrier, filed in the Circuit Court of Cole County, Mo., accuses Central United of violating fair trade practices, and committing fraud and breach of contract.
The carrier allegedly sold guaranteed renewable cancer health insurance policies, which contained “actual charge” benefits that allowed the contracts to pay benefits to policyholders based on the actual charge for cancer treatments, Mr. Huff said. Missouri's insurance director John M. Huff
Prior to Feb. 1, 2003, Central United would pay these benefits based on the amount health care providers charged the insured parties or their primary health plan for service, according to the claim.
However, after that date, the carrier began administering claims using the actual charges that were paid by the insured parties and accepted by the provider as full payment for the covered services provided.
For example, if the charge for a certain treatment was $10,000, the health insurance company could negotiate that figure down to $6,500, according to a statement from Mr. Huff.
That reduced the benefits the carrier paid to many policyholders who were supposed to have coverage for the actual cost of treatment.
Central United also started requiring clients to file “explanation of benefit” forms, Medicare benefit summaries and other proof the policyholder had paid for the treatments, according to the suit.
Central United also advertised its policies as “[paying] in addition to any other insurance, private or governmental, including Medicare, and directly to you or whomever you designate. No reduction in benefits at any age,” according to the suit.
This ad and others like it gave clients the impression that the “actual charge” benefits were not affected by additional coverage a policyholder may have, when in fact the benefits did depend on other coverage, Mr. Huff alleged.
The Missouri regulator seeks a permanent injunction against the company and its agents, and has ordered the firms to reprocess and pay all claims on “actual charge” benefit policies that were issued prior to Oct. 16, 2003, and 10% of any restitution ordered to an insurance consumer education program that's run by Mr. Huff's department.
A call to Central United was not immediately returned.
