CareFirst plans birthday refunds


September 20, 2006|By M. William Salganik | M. William Salganik,Sun reporter

CareFirst BlueCross BlueShield will be sending refund checks to policyholders whose premiums were raised at the beginning of the month when they reached certain ages rather than on their birthday.

P. Todd Cioni, Maryland associate insurance commissioner for compliance and enforcement, said yesterday that CareFirst had yet to calculate how many people were involved or how large the refunds would be or how far back they would extend. The insurer agreed to the refunds after a consumer complained about the practice.

While the amounts aren't known, the refunds won't be huge. Cioni said the original complaint involved a one-time overcharge of about $20 on a monthly premium. A class action suit, filed yesterday in Baltimore Circuit Court, said the plaintiff, Richard B. Cort of Columbia, was owed $78.60.

The billing problem involves only people who purchased CareFirst policies individually, as opposed to receiving coverage from an employer, union or other group.

CareFirst of Maryland, the CareFirst unit that is the defendant in the case, had 113,438 members covered by non-group policies as of June 30, according to CareFirst's most recent quarterly filing with the Maryland Insurance Administration.

BlueChoice, a regional CareFirst HMO covering Maryland, the District of Columbia and Northern Virginia, had another 24,517 non-group members, according to the filing.

However, Cioni said, the refunds will involve only those who had birthdays that triggered premium increases. Under a practice called "age-banding," CareFirst raises premiums when the oldest member of a family covered by a policy turns 6, 18, 30, 40, 50 or 60.

Cort said in his lawsuit that he turned 50 a year ago - Sept. 19, 2005. But, the complaint said, CareFirst raised his premium as of Sept. 1, 2005, resulting in a one-time overcharge of $78.60.

"One changes from one age group to another on one's birthday - and not a day before," said Andrew D. Levy, Cort's lawyer. Levy said the suit was "a straight breach-of-contract action."

In a letter to Cioni dated July 5, Livio Broccolino, vice president and deputy general counsel for CareFirst, said the insurer would file amendments to future policies. Presumably those amendments would make it clear that premiums could be increased as of the first of the month.

Until the amendments are approved by regulators, the letter said, CareFirst would not charge a full month's premium increase when there was a mid-month birthday, and "will be providing refunds to members who were assessed the full month's premium instead of a prorated amount."

A CareFirst spokesman, Jeffery W. Valentine, said, "The letter speaks for itself as to what we've committed to do."

Cioni said after CareFirst digs out more data on the number of people and amounts, the insurance administration would issue an order spelling out the refunds.

Levy said he would assess the future of the litigation after seeing the order. "I'm glad CareFirst is apparently acknowledging the practice is contrary to the policy."

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