A.G. Schneiderman Announces $3 Million Settlement With Excellus Bluecross Blueshield Requiring Refunds For Wrongly Denied Claims

NEW YORK - Attorney General Eric T. Schneiderman announced today a settlement with Excellus Bluecross Blueshield requiring the insurer to refund plan members who overpaid health care providers as a result of Excellus's improper accounting of deductibles. The settlement also requires Excellus to properly account for members' deductible and out-of-pocket expenses to prevent similar improper denials of claims in the future. Excellus has simultaneously entered into a stipulated agreement with the New York State Department of Financial Services relating to the same subject matter.

The company has made payments totaling approximately $3,100,000 to consumers and providers.

“An insurance policy is a two-way street. New Yorkers who live up to their end of the bargain by paying their premiums and deductibles deserve to have their insurance company live up to its promises by properly paying their claims,” Attorney General Schneiderman said. “My office will continue to look out for New Yorkers who face improperly denied health insurance claims and ensure that they are repaid the money they are owed. We are pleased that Excellus Bluecross Blueshield has refunded money to thousands of New Yorkers.”

The Attorney General's Health Care Bureau commenced an independent investigation into Excellus's failure to properly track members' deductible and out-of-pocket expenditures into its automated claims system following the receipt of customer complaints. Health insurance policies generally require customers to pay out-of-pocket up to a fixed dollar amount ‑ their deductible ‑ after which the insurance carrier is obligated to pay for covered services. In this case, Excellus failed to pay customers’ claims even after the required deductibles were met.

After Excellus wrongly denied claims, providers either billed the customers for the cost of the services or absorbed the loss themselves. Excellus reported that these accounting errors ‑ which affected 12,000 customers ‑ were the result of a technology glitch following modifications to its software. As a result of these computer errors, claims processed after September 1, 2011, were erroneously denied for failure to satisfy a deductible that had, in fact, already been met. Excellus's accounting errors primarily affected members covered under its high-deductible plans.

Excellus says that is has repaired its faulty claims system. The company also asserts that it has made payments totaling approximately $700,000 to customers who were owed less than $250 and another $2,400,000 to customers who were owed more than $250, as well as to participating providers. Excellus has agreed to conduct outreach and ensure that all members who overpaid providers because of Excellus's accounting error receive restitution, and to audit and monitor its claims processing procedures to ensure these problems do not recur.
“Excellus has reimbursed the individuals who were affected and has corrected the computer software problem which caused some of its members, particularly those with high deductible plans, to be overcharged. The Department appreciates the opportunity to have worked with Attorney General Schneiderman's office in resolving the issue,” New York State Department of Financial Services Superintendent Benjamin M. Lawsky said.

Consumers with questions or concerns about health care matters may call the Attorney General’s Health Care Bureau Helpline at 1-800-428-9071.

This investigation was handled by Assistant Attorney General Dorothea Caldwell-Brown, under the supervision of Lisa Landau, Health Care Bureau Chief, and Janet Sabel, Executive Deputy Attorney General for Social Justice.