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Health Insurer Hit With Record $1.8 Million Penalty For Selling Illegal Plans in Vermont

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The state has announced that Companion Life Insurance Company will pay a $1.8 million settlement over health insurance plans it sold between 2014 and 2016.

State regulators say an out-of-state health insurance company illegally sold inadequate plans to thousands of college students in Vermont and improperly denied nearly a half-million dollars in medical claims.

Commissioner of Financial Regulation Michael Pieciak announced Tuesday that Companion Life Insurance Company, based in South Carolina, will pay a $1.8 million settlement to the state of Vermont — the state’s largest-ever settlement with a health insurance company.

“This is a significant penalty,” Pieciak said Tuesday. “If you look around at insurance penalties across the country, this is not just significant as it relates to Vermont, but nationwide as well. So this does send, I think, the appropriate message to this particular company and to the industry more broadly.”

Between 2014 and 2016, Companion sold health insurance plans to more than 2,500 students attending 10 colleges and universities in Vermont — but Pieciak said the company never received permission to sell those plans in Vermont. He said the policies didn’t cover many of the medical costs required by state and federal law.

“For example, the policies failed to fully provide coverage for mental health treatment, a critical coverage, considering the stress of college,” Pieciak said. “The policies also failed to fully cover preventative screenings and counselings, including testing for sexually transmitted diseases, and contraceptive management, athletic injuries, emergent care, immunizations and some general illnesses as well.”

Pieciak said Companion in some instances improperly denied individual claims totaling tens of thousands of dollars. While the bulk of the settlement announced Tuesday will go to the state of Vermont, Pieciak said the agreement includes around $480,000 in restitution for students whose claims were improperly denied.

The settlement also includes $225,000 for Vermont Legal Aid’s Office of the Health Care Advocate, and $150,000 for the Vermont Financial Services Education and Victim Restitution Fund.

Companion Life Insurance Company did not immediately return messages left by phone and email Tuesday. Pieciak said the company is no long selling health insurance in Vermont.

Companion sold insurance to students attending these Vermont institutions:

  • Burlington College
  • Champlain College
  • College of St. Joseph
  • Green Mountain College
  • Landmark College
  • Middlebury College
  • New England Culinary Institute
  • Norwich University
  • Saint Michael's College
  • Sterling College

Students who bought one of these plans from 2014-2016 and had a claim they feel was improperly denied can reach out to the Department of Financial Regulation or Office of the Health Care Advocate for further information regarding potential restitution.

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