IN THE MATTER OF THE MARKET CONDUCT EXAMINATION OF

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IN THE MATTER OF THE MARKET CONDUCT EXAMINATION OF Powered By Docstoc
					BEFORE THE DIVISION OF INSURANCE

STATE OF COLORADO

FINAL AGENCY ORDER O-00-288

IN THE MATTER OF THE MARKET CONDUCT EXAMINATION OF CIGNA
HEALTHCARE OF COLORADO, INC.,

Respondent
________________________________________________________________

THIS MATTER comes before the Colorado Commissioner of Insurance (the
“Commissioner”) as a result of a market conduct examination conducted by the
Colorado Division of Insurance (“the Division”) of CIGNA Healthcare of Colorado,
Inc. ("the Respondent”), pursuant to §§ 10-1-201 to 207, C.R.S. The
Commissioner has considered and reviewed the market conduct examination
report dated February 25, 2000, relevant examiner work papers, all of
Respondent’s written submissions and rebuttals, and the recommendations of
staff. The Commissioner finds and orders as follows:

FINDINGS OF FACT

1.   At all relevant times, the Respondent was a corporation licensed by the
     Division and authorized to conduct the business of life and health insurance
     in Colorado.

2.   The Respondent was incorporated on November 20, 1985. The Division
     granted the Respondent a certificate of authority, dated May 16, 1986, to
     transact business as a Health Maintenance Organization. At the time of this
     examination, the Respondent was licensed to do business in the following
     Colorado counties: Elbert, Larimer, Weld, Boulder, Adams, Denver,
     Arapahoe, Douglas, Jefferson, Teller, El Paso and Pueblo.

3.   The Division fined the Respondent $116,000 in 1998 for health plan
     violations, pursuant to Order Number O-98-52, dated July 7, 1998.
     Examiners performed this limited market conduct examination on a re-audit
     basis. The purpose of the examination was to determine the Respondent’s
     compliance with Order Number O-98-52, and review overall compliance with
     Colorado insurance laws related to marketing and sales, contract forms and
     underwriting for small group plans, and generally accepted operating
     principles related to small group insurance reform laws.

4.   On or about February 25, 2000, the Division completed a market conduct
     examination of the Respondent. The period of examination was January 1,
     1999, through December 31, 1999.
5.   In scheduling the market conduct examination and in determining its nature
     and scope, the Commissioner considered such matters as the results of
     financial statement analyses and ratios, changes in management or
     ownership, actuarial opinions, reports of independent certified public
     accountants, complaint analyses, underwriting, claims practices, pricing,
     product solicitation, policy form compliance, market share analyses, and
     other criteria as set forth in the most recent available edition of the
     examiners’ handbook adopted by the National Association of Insurance
     Commissioners.

6.   In conducting the examination, the examiners observed those guidelines and
     procedures set forth in the most recent available edition of the examiners’
     handbook adopted by the National Association of Insurance Commissioners
     and the Colorado insurance examiners handbook. The commissioner also
     employed other guidelines and procedures that he deemed appropriate,
     pursuant to § 10-1-204(1), C.R.S.

7.   The market conduct examiners prepared an examination report (the
     “Report”). The Report is comprised of only the facts appearing upon the
     books, records, or other documents of the Respondent, its agents or other
     persons examined, or as ascertained from the testimony of the Respondent's
     officers or agents or other persons examined concerning Respondent's
     affairs. The Report contains the conclusions and recommendations that the
     examiners find reasonably warranted based upon the facts.

8.   On May 4, 2000, the Respondent submitted its written response to the
     Report. In addition, the Division met with the Respondent to discuss and
     consider Respondent’s responses and rebuttals and to explain numerous
     issues regarding the examination and compliance with Colorado law.

9.   The Commissioner fully reviewed and considered all of the Respondent’s
     submissions and rebuttals, and all relevant portions of the examiner’s work
     papers.

CONCLUSIONS OF LAW AND ORDER

10. Unless expressly modified in this Order, the Commissioner adopts the facts,
    conclusions and recommendations contained in the final Report. A copy of
    the final Report is attached to this Order and is incorporated by reference.

11. Issue B1 concerns the following violation: Failure to correctly apply the
    pricing model based on filed rates to rates quoted and charged to newly
    issued state mandated plans. Respondent shall provide evidence to the
    Division that it has revised its procedures to monitor its pricing model to
    ensure it remains in compliance with Colorado insurance laws.



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12. Issue E1 concerns the following violation: Failure to include mandated
    benefit coverage for mammography and prostate screening in Basic and
    Standard, Certificate of HMO Coverage. (Prior issue E24 of the 1996 final
    exam report). The Respondent shall provide documentation that it has
    revised its policy contract forms to comply with Colorado law.

13. Issue E2 concerns the following violation: The Company 's policy contracts
    contained an incorrect definition of a disabled dependent child. (Prior issue
    E13 of the 1996 final exam report). The Respondent shall provide
    documentation that it has revised its definition of a disabled dependent child
    in the policy contract forms to ensure compliance with Colorado law.

14. Issue E3 concerns the following violation: Failure to provide appropriate
    policy form language for benefits for auto accident injuries in the absence of
    No-Fault Auto insurance. The Respondent shall provide documentation that
    it has removed the restrictive language and amended policy contracts to
    reflect a coordination provision to ensure compliance with Colorado No-Fault
    Automobile Insurance law.

15. Issue E4 concerns the following violation: Failure to file the enrollment form
    for certification with the Division. The Respondent shall provide
    documentation that it has certified and filed all forms it uses to ensure
    compliance with Colorado law.

16. Issue E5 concerns the following violation: Failure to file a timely annual
    forms certification with the Division and include a complete list of documents
    used by the Respondent. Respondent shall provide evidence to the Division
    that it has made a revised filing for certification of all its small group health
    policy forms being used in Colorado.

17. Issue E6 concerns the following violation: Failure to provide clear language
    in the policy contract for coverage of Diabetes. The Respondent shall
    provide documentation that it has amended its policy contract forms to
    include evidence of coverage for Diabetes and related services in
    compliance with Colorado law.

18. Issue E7 concerns the following violation: Failure to list or describe benefits
    regarding direct access to Obstetrical and Gynecological Services in the
    HMO Health Benefit Plan, Basic and Standard, Certificate of HMO
    Coverage. The Respondent shall provide documentation that it has
    amended its policy contract forms and included the mandated provision for
    Obstetrical and Gynecological Services in order to ensure compliance with
    Colorado law.




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19. Issue E8 concerns the following violation: Failure to provide mandatory
    coverage for hospitalization and general anesthesia for dental procedures for
    dependent children. The Respondent shall provide documentation to the
    Division that it has amended its policy contracts to list or describe coverage
    for general anesthesia for dental procedures for dependent children.

20. Issue E9 concerns the following violation: Failure to correctly define
    "Transplant Services" in the Basic and Standard, Certificate of HMO
    Coverage. The Respondent shall provide documentation that it has
    amended its policy contract to display the entire definition of mandated
    benefits regarding “Transplant Services”.

21. Issue E10 concerns the following violation: Failure to include coverage for
    crutches as part of Durable Medical Equipment in the Basic and Standard,
    Certificate of HMO Coverage. The Respondent shall provide documentation
    that it has amended its policy contract exclusion to define “crutches” as a
    covered item under Durable Medical Equipment.

22. Issue E11 concerns the following violation: Failure to display the applicable
    “type of plan” on the cover of the policy contract for the Basic and Standard
    health benefit plans. The Respondent shall provide documentation that it
    has properly displayed the full description of its plans on the cover of the
    policy contract.

23. Issue E13 concerns the following violation: Failure to make available a
    member’s right to request Network Access Plan information in the Basic and
    Standard, Certificate of HMO Coverage. The Respondent shall provide
    documentation that it has changed its policy contracts to add the language
    for “provider network and health quality information.”

24. Issue E14 concerns the following violation: Failure to maintain the integrity
    of a small group health contract by allowing large group health wording that
    is misleading and contrary to terminations of agreement. Respondent shall
    provide evidence to the Division that it has removed the misleading large
    group wording in its small group health plans.

25. Issue E15 concerns the following violation: Failure to have a correct
    definition of “Eligible Employee”. The Respondent shall provide
    documentation that it has amended its contract plan restrictive language
    concerning a Medicare requirement for eligibility to enroll as a subscriber for
    small group health plans.

26. Issue G1 concerns the following violation: Failure to display anti-fraud
    statement on Company Forms. Respondent shall provide evidence to the
    Division that it has changed its procedures to display the anti-fraud
    statement on forms to ensure compliance with Colorado law.



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27. Pursuant to § 10-1-205(3)(d), C.R.S., the Respondent shall pay a civil
    penalty in the amount of five thousand five hundred dollars ($5,500.00). This
    fine represents a combined fine for the cited violations of Colorado law. This
    fine was calculated in accordance with Division guidelines for assessing
    penalties and fines, including Division bulletin no. 1-98, issued on January 1,
    1998.

28. Unless otherwise specified in this Order, all requirements with this Order
    shall be completed within thirty (30) days of the date of this Order.
    Respondent shall submit written evidence of compliance with all
    requirements to the Division within the thirty (30) day time frame. The
    Division’s records indicate that Respondent has complied with the corrective
    actions ordered concerning the following issues: B1, E5, E14 and G1.
    Copies of rate and form filings shall be provided to both the rates and forms
    section and the market conduct sections of the Division. All audit reports
    must be received within ninety (90) days of the Order, with a summary of the
    findings, including an accounting of all monetary payments to covered
    persons.

29. This Order shall not prevent the Division from commencing future agency
    action relating to conduct of the Respondent not specifically addressed in the
    Report, or not resolved according to the terms and conditions expressed in
    this Order, or occurring before or after the examination period. Failure by the
    Respondent to comply with the terms of this Order may result in additional
    actions, penalties and sanctions, as allowable by law.

30. Copies of the Report, the Respondent's response, and this final Order will be
    made available to the public no earlier than thirty (30) days after the date of
    this Order, subject to the requirements of § 10-1-205, C.R.S. and except as
    otherwise provided in §§ 24-72-101 to 402, C.R.S., Colorado’s open records
    laws.

WHEREFORE: It is hereby ordered that the findings, conclusions and
recommendations contained in the final examination report dated February 25,
2000, as may be modified by this Order, are hereby adopted and filed and made
an official record of this office, and the above Order is hereby approved this 14th
day of June, 2000.




William J. Kirven III
Commissioner of Insurance




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