Governor Paterson Announces More than $13 Million Recovered For Insurance Consumers

NEW YORK, NY (08/05/2009)(readMedia)-- Governor David A. Paterson today announced that $13.6 million was recovered from insurance companies between April 1 and June 30, 2009, for almost 3,000 consumers and health care providers who filed complaints with the New York State Insurance Department. This is up from $8.5 million recovered in the first quarter of 2009, for a total of $22 million for the first half of the year.

"With so many affected by the economic downturn, we will continue to work to make sure New Yorkers get full value for their insurance dollars," said Governor Paterson. "Insurance is a promise to protect us at our most vulnerable, and New Yorkers can rely on us to protect them if insurance companies do not keep their promises."

Acting Insurance Superintendent Kermitt J. Brooks said: "Governor Paterson's commitment to consumers is one shared by the Insurance Department and we will continue to work to make sure they are treated fairly. If you have a problem with an insurance company, let us know. In these difficult times, every New Yorker should know they have some place to turn for insurance help."

Cases where the Insurance Department recovered money from insurance companies for consumers include the following:

Life insurance: After attempting to claim her late husband's group life insurance for over a year, a New York City widow turned to the Insurance Department's Consumer Services Bureau for assistance. Her husband endured a long-term disability that created a financial hardship, which the nonpayment of the life insurance benefits compounded. She submitted a complaint that appeared to prove her late husband owned life insurance coverage while employed and the coverage remained in force after he left his job. The Department was able to resolve the issue, leading to the process of the claim that would have otherwise gone unattended. The company ultimately determined that she was in fact entitled to a $30,000 death benefit.

Long Term Disability: A man was unable to work as a result of Chronic Fatigue Syndrome and cognitive deficiencies and applied for long term disability benefits. His insurance company denied his application and stated a lack of sufficient medical documentation to support the decision. After the man contacted the Department, an independent medical exam was conducted and supported the insured's claim. A check in the amount of $75,225.94 was issued for the period of July 19, 2007 through March 31, 2009. In addition, future benefits will be issued on a monthly basis to the insured.

Health: A consumer, while hospitalized, underwent a change in coverage from one insurer to another. Both carriers refused to pay for the hospital stay from the date the policy changed. As a result, the hospital placed a judgment against the patient for the charges. After the Department intervened, the first carrier made payment in the amount of $96,529.97 in full satisfaction of the hospital claim. Another New Yorker complained to the Department that payment of a hospital claim was taking too long. The Department investigated and the company acknowledged an error in delaying payment. Not only was the claim processed and paid at the contracted rate of $73,624.34, but the insurer also paid $1,379.71 in late pay interest.

Governor Paterson recently signed legislation enacting a series of managed care reforms that help consumers receive the care they need and more easily resolve inappropriately delayed or denied claims, including: Prohibiting insurers from treating an in-network provider as out-of-network simply because the referring provider was out-of-network; Extending current protections for consumers in HMOs to consumers in "HMO look-alike" plans - health plans that operate the same as HMOs but are not licensed as HMOs, such as "exclusive provider organizations" or EPOs; and Reducing the time frame for health insurers to pay claims from 45 days to 30 days for electronically submitted claims.

In addition to the amounts recovered, the Insurance Department, during the first six months of 2009, successfully worked on behalf of 247 consumers to have their insurance policies reinstated after companies canceled those policies. While there was no dollar amount related to these reinstatements, the policy continuation provided the consumers financial preparation for future claims. Consumers were offered the reinstatement of their policies and coverage for any claims that occurred during the period of lapsed coverage. Consumers who had a lapse in their automobile insurance and thus paid a fine to the Department of Motor Vehicles had their fines refunded. These types of complaints sometimes result in other consumer policies being eligible for reinstatement.

The Insurance Department handles about 60,000 complaints and 200,000 calls to its hotline annually. The Department investigates each complaint, and, depending on the result of that investigation, the Department may direct the company involved to compensate the consumer. Consumers with insurance questions or concerns can call the Department's consumer hotline at 1-800-342-3736. The hotline is open from 9 a.m. to 4:30 p.m. Monday through Friday. Consumers may also ask questions or file complaints at the Department's website, www.ins.state.ny.us.

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