Attorney General Cuomo Secures Agreement With Guardian Life Insurance To Join Historic Healthcare Reform Efforts

NEW YORK, NY (March 3, 2009) – Attorney General Andrew M. Cuomo today reached an agreement with Guardian Life Insurance Company of America ("Guardian") in his historic reform of the healthcare reimbursement system. Guardian marks the eighth insurer to sign an agreement with the Attorney General’s office to end its relationship with the defective Ingenix database in Cuomo's nationwide sweep of the insurance industry to end conflicts of interest and generate fair reimbursement rates for working families nationwide. Guardian has also agreed to pay $500,000 to fund the new, independent database.

Guardian is a Fortune 500 company headquartered in New York, and is one of the largest mutual life insurance companies in the United States.  In addition to its primary business of life insurance, Guardian is a national health insurer with most of its New York enrollees in New York City, Long Island and Westchester County. 

“Today’s agreement brings us within striking distance of complete industry reform,” said Attorney General Cuomo. “With another national insurer embracing our efforts, we are able to continue the momentum we’ve built over the past few months and help more Americans avoid the burden of medical bills they do not deserve and cannot afford.”

Earlier this month, Attorney General Cuomo announced sweeping reforms to end the manipulation of reimbursement rates at the expense of patients across the country. After a year-long investigation revealed that the health insurance industry relied on a defective database to help set rates, Cuomo reached groundbreaking, national agreements with UnitedHealth Group Inc. (NYSE: UNH) (“United”), the owner of the Ingenix database and the second-largest insurer in the country, along with Aetna (NYSE: AET), the nation’s third-largest health insurer, and CIGNA (NYSE: CI), another major insurer. Most recently, he announced an agreement with WellPoint (NYSE: WLP), the largest insurer in the country and in New York State.

Cuomo has also brought his reform efforts to Upstate New York, securing agreements with the Schenectady-based MVP healthcare, Inc./ Preferred Care (“MVP”), Buffalo-based Independent Health (“Independent”) and Buffalo-based HealthNow. He has filed notice of intent to sue two other Upstate insurers: Capital District Physician’s Health Plan (“CDPHP”) and Excellus Health Plan (“Excellus”) (including its Buffalo-based affiliate, Univera), for continuing to defraud consumers and manipulate rates.

Attorney General Cuomo’s investigation concerned allegations that as a subsidiary of United, Ingenix had a vested interest in helping set rates low, so companies could underpay patients for out-of-network services. The investigation revealed that the database intentionally skewed “usual and customary” rates downward through faulty data collection, poor pooling procedures, and the lack of audits, meaning consumers were forced to pay more than they should have.  The investigation found the rate of underpayment by insurers ranged from ten to twenty-eight percent for various medical services across the state.  The Attorney General found that having a health insurer determine the “usual and customary” rate – a large portion of which the insurer then reimburses – creates an incentive for the insurer to manipulate the rate downward.  The establishment of a new database, independently owned and operated by a nonprofit organization, is designed to remove this conflict of interest.

Under the agreement secured with United, the database of billing information operated by Ingenix will close.  United also agreed to pay $50 million to a qualified nonprofit organization that will establish a new, independent database to help determine fair out-of-network reimbursement rates for consumers throughout the United States.  Cuomo’s agreement with Aetna secured another $20 million for the database and CIGNA and WellPoint have each agreed to contribute $10 million. With the money secured from Guardian today, the total for the new database is over $90 million.

Under the terms of today’s agreements:

  • Guardian will pay $500K toward a new, independent database run by a qualified nonprofit organization;
  • The nonprofit will own and operate the new database, and will be the sole arbiter and decision-maker with respect to all data contribution protocols and all other methodologies used in connection with the database;
  • The nonprofit will develop a website where, for the first time, consumers around the country can find out in advance how much they may be reimbursed for common out-of-network medical services in their area;
  • The nonprofit will make rate information from the database available to health insurers;
  • The nonprofit will use the new database to conduct academic research to help improve the healthcare system;
  • The nonprofit will be selected and announced at a future date.

In February 2008, Cuomo announced that he had issued subpoenas to the nation’s largest health insurance companies that use the Ingenix database, including Aetna, CIGNA and WellPoint/Empire BlueCross BlueShield. The Attorney General’s industry-wide investigation is ongoing.

Richard Jones, Senior Vice President and Chief Communications Officer of Guardian, said: “Guardian is pleased to cooperate with the Attorney General and to participate in the development of a not-for-profit independent 'usual and customary rate' database that does not have the conflicts of interest that have been identified through the Attorney General’s investigation into United’s Ingenix database.  This is a significant healthcare reform initiative that will provide transparency, accountability and fairness, and Guardian fully supports this effort.”

Michael Rosenberg MD, President of the Medical society of the State of New York, called the agreement “another building block in the Attorney General Cuomo’s effort to assure that New Yorkers get a fair deal in exchange for premiums paid to health insurance carriers. This is a company that has announced plans to pay $723 million to its shareholders this year and it is only right that they agree to stop using bogus data to determine out-of-network payments for patients and physicians.” 

Chuck Bell, Programs Director for Consumers Union, said: “Attorney General Cuomo's investigation has exposed unfair insurance company practices for out-of-network healthcare, and created an excellent new framework for a consumer-friendly solution.   We commend the Guardian Life Insurance Company for supporting the new independent nonprofit institute that will collect and maintain data on out-of-network charges, and contributing $500,000 to fund its work.”

The agreement announced today is the result of an investigation by Deputy Chief of the healthcare Bureau James E. Dering, Senior Trial Counsel Kathryn E. Diaz, and Assistant Attorneys General Brant Campbell and Sandra Rodriguez, under the direction of Linda A. Lacewell, the head of the Attorney General’s Healthcare Industry Taskforce.

In January, Cuomo also issued a report on his investigation, “healthcare Report: The Consumer Reimbursement System is Code Blue.”  The report highlights the conflicts of interest and other defects in the current system and calls for the reforms announced today.  To access the report, get consumer tips for out-of-network care, or to file a complaint, please visit