The New Jersey Department of Banking and Insurance said a review of Cigna Healthcare of New Jersey’s market conduct found that the health insurer failed in more than 84,000 cases to comply with the state’s prompt payment law. The insurer also underpaid claims, failed to pay the required 10% interest penalty on late claims and in general failed to keep adequate records and controls of its claims-handling process, insurance department investigators said. In total, the examination found a 26% overall error rate on Cigna claims handled in 2000. Although Cigna performed strongly on in-house claims handling, “it did a poor job of overseeing the vendors it hired as claims handling subcontractors,” Insurance Commissioner Holly Bakke said in a written statement. The company has acted quickly to fix the problems identified, and its willingness to take corrective action will be considered when fines are set later, officials said.
Cigna said in a written statement that its own examination found that 90% of the 836,000 claims processed in the same period were on time and three-fourths of them were processed in-house. Since 2000, the company has “taken measures to better manage vendor performance,” the statement said, and in the same year it began paying interest on all late claims. Cigna said it plans to adopt all of the state’s recommendations and believes itself to now be in compliance with state law.