NYDFS Issues Numerous Disciplinary Actions
Crackdown on Health Plans’ Non-Compliance with Contraceptive Coverage
The New York State Department of Financial Services (“DFS”) closed out the last quarter of 2018 issuing numerous disciplinary actions, with failing to disclose information on an original or renewal application, as the most common violation, with nominal fines. DFS issued heftier fines, however, where licenses expired or lapsed and the individual or entity transacted insurance business during these periods of lapse. Such fines in this period ranged from $10,000 to $29,250, presumably based on the volume of business conducted.
Most recently, in the January 4, 2019 list of disciplinary actions, fines continued in this area for, among other violations, failing to disclose a criminal conviction, failing to disclose another state agency’s revocation, and failing to disclose within 30 days of a pretrial hearing that respondent was the subject of a criminal prosecution. Most notably, however, the majority of the fines issued thus far in 2019 appear to be the result of DFS’ investigation into and crack down on various health insurers, health service plans, and health maintenance organizations (collectively referred to here as “health plans”), in connection with failing to comply with contraceptive coverage requirements under New York law.
The focus of the investigation appears to have been in 2016, with respect to denying coverage of required FDA approved contraceptives (or their equivalents) and/or for failing to appropriately pay claims and/or provide accurate information to consumers.
By way of background, New York Insurance Law requires insurers that provide coverage for prescription drugs to include coverage for contraceptive drugs and devices approved by the FDA or generic equivalents. In addition, as a general matter, New York insurance law also requires such insurers and health plans to include coverage for preventative care and screenings, including contraceptive drugs and devices, at no cost-sharing. There are at least 18 contraceptive methods for women approved by the FDA. New York law requires that health plans provide coverage for all contraceptive drugs and devices and must provide coverage with no cost-sharing for at least one form of contraception within each of the methods identified for women by the FDA. Further, health plans must provide complete and accurate information regarding contraceptive coverage to consumers. These requirements and additional guidelines are summarized in a January 21, 2017 Supplement No. 1 to Insurance Circular Letter No. 1 (2003).
Following its Circular Letter, DFS published a February 2017 report summarizing the results of its investigation into approximately 15 health plans contacted and issues with respect to inaccurate or inconsistent information and failures to adhere to New York law with respect to contraceptive drugs and devices. The investigation presumably led to the numerous disciplinary actions, published by DFS on January 4, 2019, against various health plans. As penalties, DFS’s consent orders require, among other things, that restitution be made to all affected policyholders, and that claims examiners be re-trained on the appropriate procedures for the adjudication of claims for contraception coverage and that the health plans at issue provide proof of corrective action implemented. The fines imposed in this area, against at least eight companies ranged with the most significant amounts at $85,000, $118,000 and $228,822. DFS’s investigation in this area and crackdown demonstrates its concern on ensuring health plans properly provide contraceptive drugs and devices to consumers.
