Insurance Regulators

The Maryland Insurance Division has come under fire from state legislators reacting to a recent audit that detailed the agency's management deficiencies.At a joint hearing yesterday of the House Appropriations subcommittee on law enforcement and transportation and the Economics Matters Committee, panel members peppered insurance regulators with questions about using scarce state funds for studies involving no-fault insurance and about mistakes in mathematics made by some regulators.At the end of the two-hour hearing in Annapolis, Del. Timothy F. Maloney, D-Prince George's, subcommittee chairman, said he would support increased funding for the division but only with the proviso that "fundamental" management problems be addressed.

Baltimore County auto insurance salesman Hal Katz is known for his offbeat television commercials, such as the one with the rapper singing, "Hey, Hal, you're the best!" Maryland insurance regulators likely would disagree. The Maryland Insurance Administration has been investigating Katz and his companies in the past several months over the alleged mishandling of premiums and use of unlicensed agents. Last week, Baltimore City Circuit Court placed two of his companies — Interstate Auto Insurance Co. and Katz's Insurance Agency — into receivership.

William L. Jews, chief executive of Blue Cross Blue Shield of Maryland, asked state insurance regulators yesterday to approve a business consolidation with the District of Columbia Blue Cross plan without imposing "costly and unnecessary" conditions.His comments came at the end of the second and final hearing on the consolidation plan before Steven B. Larsen, Maryland's insurance commissioner.Consultants and consumer groups have asked the regulators to impose conditions on the Blue Crosses' affiliation to ensure adequate regulatory control and to protect charitable assets if the two later convert to for-profit status.

You're looking for someone to help manage your life savings in retirement. Surely an adviser with a "senior" designation, like a registered super-duper senior consultant, must be up to the job, right? Not really. There are all sorts of designations cropping up. Many of them have the word "senior" in them, implying that the person has expertise in the needs of older investors. But too often these designations are meaningless marketing tools used to earn the trust of older investors who are then pitched high-cost, unsuitable investments.

More than 1,800 people are expected to attend the four-day summer national meeting of the National Association of Insurance Commissioners, which begins in Baltimore today and continues through Wednesday.The NAIC, the nation's oldest organization of state government officials, consists of insurance regulators from 50 states, Washington and four U.S. territories. The group develops model laws and regulations that states pattern their own laws after. The NAIC also accredits state insurance agencies.

CHICAGO -- Illinois insurance regulators moved yesterday to liquidate one of the states largest health maintenance organizations in a rare move that eventually could force nearly 90,000 people into a new health plan. The Illinois Department of Insurance filed its petition against American Health Care Providers Inc. of Richton Park, Ill., alleging that a financial review shows that the HMO is being mismanaged. American is insolvent by state standards with $25 million more in liabilities than it has assets after running up millions of dollars in unpaid bills to doctors and hospitals while carrying inadequate reserves, according to the states petition filed in Cook County Circuit Court.

Maryland drivers could receive more than $10 million in refunds as their car insurers make up for a failure to pass along discounts for safety and anti-theft devices, the governor's office and state regulators said yesterday.Hundreds of thousands of drivers could receive rebates of between $20 and $50, officials said.So far, more than $5 million in mistakes have been found by auto insurers doing business in the state, according to insurance regulators, and some companies have begun mailing the rebates, often without explanation.

Maryland insurance regulators have ordered a Texas firm, United Service Association for Health Care -- also known as USA for Health Care -- to stop selling insurance policies in Maryland because it doesn't comply with state laws.According to a cease-and-desist order issued by the Maryland Insurance Administration, the U.S. Labor Department has determined that the firm is operating as a multiple employer welfare arrangement that is not fully insured and that it falls under state, not federal, regulation.

The Maryland and District of Columbia Blue Cross plans need to combine operations because smaller local and regional health insurers "are too small to compete in the marketplace" against national managed-care companies, William L. Jews, chief executive officer of Blue Cross Blue Shield of Maryland, said yesterday."

Mid Atlantic Medical Services Inc., in an apparent move to beef up sales and investor confidence, won permission from state regulators yesterday to lower prices on its small-group business by an average 15 percent.The lower prices, charged for the company's health maintenance organization, Optimum Choice Inc., came amid indications that MAMSI was facing increased competition for customers -- not just on price, but also on service.The Rockville company is battling for market share with Blue Cross and Blue Shield of Maryland and other insurers that are marketing new products in response to a new state law aimed at small businesses.

The Maryland Insurance Administration fined Allstate Corp. and its affiliates $750,000 - the largest penalty ever from the regulatory agency - for failing to give tens of thousands of consumers proper notice about their policies, not making required filings with the state, and miscalculating some premiums. Regulators, in announcing the penalty yesterday, said the company has exhibited a pattern of violating state laws regarding consumer notifications. The violations involved the company and its affiliates under the Encompass brand.

Like millions of America's self-employed workers, Doug Christensen found himself on his own when it came to health insurance. Christensen, who lost his corporate benefits when he started his own business making boat parts, thought his search was over when a representative of the nonprofit National Association for the Self-Employed offered a policy to cover him and his wife, Dana, a court reporter. The association referred them to Mega Life & Health Insurance Co. - which, for about $400 a month, would even include a special chemotherapy rider to help in case of a recurrence of the bone cancer he'd battled nearly seven years before.

Extending the battle over the impact of the new HMO premium tax, a Baltimore County Democrat urged her state Senate colleagues yesterday to support a measure blocking insurers' ability to increase rates without regulatory review. The state insurance commissioner should be required to look at "soaring profits" and lavish executive pay, and to hold a public hearing before allowing health maintenance organizations to increase premium rates, Sen. Delores G. Kelley told the Senate Finance Committee.

Top Democratic lawmakers blasted Maryland's insurance regulator yesterday for allowing HMOs to pass a 2 percent tax increase on to consumers without a close examination of industry finances, and a leading delegate called for a boycott of higher insurance bills until the costs can be justified. "I would encourage those who have been notified of the rate increases to simply not pay them, and if they are threatened with cancellation, to appeal them to the insurance commissioner," said Del. John Adams Hurson of Montgomery County, chairman of the House Health and Government Operations Committee.

WASHINGTON - The nation's insurance commissioners say the Bush administration has made misleading statements about the new Medicare drug benefit in an effort to persuade people to sign up. The National Association of Insurance Commissioners, which represents insurance regulators in all 50 states, registered its concern in a letter to the federal Medicare agency. State officials elaborated on their concerns in recent interviews. If private insurers made such statements about their products, the association said, state officials would investigate their marketing practices for possible violation of consumer protection laws.

California proposed regulations yesterday to force insurance brokers and agents to fully disclose their compensation or face stiff fines and the loss of their licenses. The regulations, if approved, would levy fines of up to $10,000 each time a bonus or "contingent" commission wasn't disclosed. Violations also could lead to the revoking of licenses to sell insurance. California insurance regulators also said they planned to file civil lawsuits next week but declined to name the targets or types of insurance involved.

Maryland insurance regulators have completed a financial examination that shows the state's largest insurer was far less healthy than was originally reported.The state's examination of Blue Cross and Blue Shield of Maryland, which focused on the company's finances from 1988 through the end of 1992, put the company's reserve at $9.1 million as of Dec. 31. That compared with $24.9 million reported by Blue Cross in March."They were obviously skating on rather thin ice at the end of the year," said Dwight K. Bartlett III, the Maryland insurance commissioner.

In its first year reviewing HMO care decisions, the Maryland Insurance Administration conducted 91 full investigations and reversed the HMO about half the time, according to a new report. Insurance regulators received 1,063 complaints during the year, but more than 70 percent involved issues that were not subject to the appeals process. In 109 cases, the HMO reversed itself during the course of the review. In another 110 cases, the patient withdrew the complaint. Of the cases that went through full investigations, the regulators upheld the HMO decision not to cover services 45 times.

The management of CareFirst BlueCross BlueShield was so intent on converting the company to for-profit operation that it created a process that thwarted its ambitions. In ruling against the insurer's application to sell itself to WellPoint Health Networks Inc., state Insurance Commissioner Steven B. Larsen found that in seeking to peddle the company - and to cash in personally - CareFirst executives tilted the process, causing it to fail. "A deal like this might be the best result possible for the public," said Walter Smith, executive director of the D.C. Appleseed Center for Law and Justice, "but we'll never know that because these guys so misplayed it."

Maryland's 50 general hospitals asked state regulators yesterday for a 2.5 percent rate increase to pay for higher salaries and other inducements to meet "the most severe nursing shortage in more than a decade." The shortage is so acute that hospitals sometimes have to postpone surgeries or divert emergency patients to other hospitals, administrators said. "Every morning, we assess our critical care capacity and decide how many surgeries we can accomplish and generally what we can and cannot do for our community that day," said Karen C. Poisker, vice president for patient care services at Peninsula Regional Medical Center in Salisbury.