DFR reaches $1.8 million settlement in student health insurance dispute

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DFR reaches $1.8 million settlement in student health insurance dispute

Tue, 12/03/2019 - 1:40pm -- tim

Vermont Business Magazine Today the Vermont Department of Financial Regulation (DFR) announced a $1.8 million settlement with Companion Life Insurance Company, of South Carolina, for selling unapproved and inadequate student health insurance policies to students at 10 Vermont higher education institutions. The penalty component of the settlement is the largest ever ordered by DFR against an insurance company. 

Companion offered health insurance to over 2,500 Vermont students, but did not file its policies with DFR for approval. Had the policies been filed, DFR would not have approved them as they did not include important coverage mandated under Vermont law and the Affordable Care Act. Missing coverages included certain preventive screenings and counseling (including for sexually transmitted diseases), contraceptive management, mental health and substance abuse treatment, and athletic injuries. As a result, several hundred claims were improperly denied, and 212 students will receive restitution for those claims.  

“Consumer protection is at the core of our department’s mission so I am pleased every student with an improperly denied claim will receive restitution under this settlement,” said DFR Commissioner Michael Pieciak. “Further, this significant penalty sends a strong and simple message to financial service companies that failure to comply with Vermont’s consumer protection laws will have firm consequences.”  

Vermont Governor Phil Scott applauded the work of DFR. “My administration works hard to protect Vermont consumers and ensure their fair treatment. Consumers must have confidence in our marketplaces and businesses must compete on a level playing field. I appreciate the work of our DFR team to secure this settlement, which achieves both these goals,” said Governor Scott.    

In addition to the claims-payment deficiencies, DFR also found that Companion failed to accurately represent its policies in marketing materials, maintain appropriate records and procedures and supervise its business partners.

The $1.8 million from the settlement will be paid out as follows:

  • $950,000 administrative penalty to the State of Vermont
  • $481,243 in restitution to students whose claims were wrongfully denied
  • $225,000 to the Vermont Legal Aid’s Office of the Health Care Advocate
  • $150,000 to the Vermont Financial Services Education and Victim Restitution Fund

Under the settlement, Vermont Legal Aid’s Office of the Health Care Advocate will use the $225,000 to develop a targeted education campaign about student health insurance and assist DFR in delivering restitution to the impacted students.

“This is an excellent example of DFR protecting Vermonters from illegal insurance company practices. We are eager to launch a special project to provide additional legal supports and education to Vermont’s college students,” said Mike Fisher, the chief health care advocate.

DFR Commissioner Pieciak and Deputy Commissioner Kevin Gaffney commend Karla Nuissl, Chris Rouleau, Phil Keller, Marcia Violette, Izzy Keiser and Chris Antoine for their excellent work in settling this matter.

Restitution Information

Companion sold student health insurance to students attending Burlington College, Champlain College, College of St Joseph, Green Mountain College, Landmark College, Middlebury College, New England Culinary Institute, Norwich University, St Michaels College and Sterling College.

In addition to the 212 students already identified for restitution, Companion is also responsible for paying restitution for any improperly denied claims during academic years 2014/2015 and 2015/2016 not identified during DFR’s investigation. The 212 students already identified should expect to receive contact from the Office of the Health Care Advocates and/or Companion to coordinate restitution payments.

Students who purchased health insurance through these institutions during the relevant period and believe a medical claim may have been improperly denied should contact:

Source: Montpelier, Vt. – 12.3.2019. Vermont Department of Financial Regulation Twitter, Facebook, website.