DCBS Media Release
April 14, 2005
State fines two health insurers $60,000
The Oregon Department of Consumer and Business Services has fined two insurance companies a total of $60,000 for failing to notify employees of their "portability" rights when they lost group health insurance coverage.
PacifiCare Life Assurance Co. of Santa Ana, California, has received a $40,000 fine, while Great-West Life & Annuity Insurance Co. of Greenwood Village, Colorado, was assessed $20,000. The fines go to the State General Fund.
Portability allows individuals who have lost group health insurance in an employer-sponsored plan to continue coverage if they meet certain requirements and pay the premiums.
Health insurers must directly notify employees of their portability rights within 10 days of the loss of group coverage unless the insurance will be provided by another group plan.
"The Legislature decided in 1995 that Oregonians should have the right to continue health insurance coverage, a year before Congress passed similar legislation," said DCBS Director Cory Streisinger. "These two insurers failed to notify employees of their portability rights, and that's simply not acceptable."
The DCBS Insurance Division discovered the violations after it analyzed member enrollment reports submitted by health insurance companies and compared the number of people in portability plans to total group membership. Division market analysts then contacted the companies and learned that PacifiCare Life and Great-West weren't providing the required notices.
"Portability is designed to protect people who lose their group health benefits and may have trouble finding coverage in the individual market because of health problems," said Oregon Insurance Administrator Joel Ario. "Employees have a limited time to apply for portability coverage, so we adopted an administrative rule requiring insurers to directly notify them of their rights once coverage ends."
Ario said enforcement action against a third health insurer is pending for a similar violation.
"We're going to closely monitor health insurers, especially out-of-state companies doing business in Oregon, to ensure that employees receive the required notices," he said.
More information about portability is available on the Insurance Division's Web site.