Blue Cross Blue Shield of Alabama was hit by state regulators with an $8 million penalty for charging rates that
differed from those approved by the Alabama Department of Insurance from 2005
to 2013. The difference in rates occurred in about 1,400 plans issued to small
group employers - those with two to 50 employees - and some COBRA plans for
former employees. Attorneys involved in an anti-trust violation case said the
practice violated state laws that require rates to be filed and approved by
insurance regulators.
The rate variances were mismatched, resulting in undercharges of almost $107 million and overcharges of almost $33 million,
according to the order issued on August 16th by the Alabama Department of
Insurance. The $8 million assessment, as it was described in the order,
was levied because the company failed to inform the department of insurance
about its methods for raising or reducing rates. The company must also pay
$100,000 to the department for costs related to the investigation.
The Blue Cross Blue Shield statement reported
that refunds have been made to more than 1,400 small business customers and
2,200 COBRA customers. The company will not seek reimbursement from customers
who were undercharged. Customers who believe they were overcharged by the
company can make a claim to the Alabama Department of Insurance within the next
two years.
