Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, September 23, 1994 TAG: 9409230132
SECTION: VIRGINIA PAGE: A1 EDITION: METRO
SOURCE: SANDRA BROWN KELLY STAFF WRITER
DATELINE: LENGTH: Medium
Trigon offered to set up a refund program and pay the civil settlement, the largest ever obtained by the state, to end an investigation into the insurance company's billing practices.
Policyholders who made co-insurance payments for medical services from 1984 through 1993 are eligible for refunds. Co-insurance is the percentage of the covered facility bill for which the policyholder is responsible, minus any amounts paid toward deductibles or services that are not covered.
The SCC's Bureau of Insurance had alleged that Trigon violated the Virginia Unfair Trade Practices Act by not passing on negotiated discounts to policyholders. Trigon negotiated lower hospital fees, but the portion of bills paid by policyholders was based on the original charges, not the reduced fees. Hospitals then awarded the company a credit.
There are 500,000 potential claimants, and the bill for the refunds could run into the "tens of millions," an SCC spokesman said.
Trigon officials would not give any cost estimates.
"Its certainly a multimillion-dollar number. But to say it's tens of millions of dollars, that's too broad a range," Norwood Davis, Trigon chairman and chief executive officer, said Thursday.
The company did not admit any wrongdoing.
"We made a mistake. We are going to correct it," Davis said. "We are undertaking this program because we sincerely believe that our reputation and credibility with our customers must be beyond question.
"I think our reputation is a very solid one. It's been tarnished through this, but I can tell you we're going to do what we have to do to get that reputation back to where it was."
State Insurance Commissioner Steven T. Foster said the settlement will ``put Trigon on notice that the commission will not tolerate any further practices of this nature.''
Trigon's billing practices also are being investigated by the state attorney general's office, which is not part of Thursday's settlement. Attorney General Jim Gilmore called the settlement ``a positive step'' but said his investigation is continuing.
The refund program will be overseen by the SCC's Bureau of Insurance and audited by an independent accounting firm.
A report issued in July by the Bureau of Insurance said an investigation uncovered about 2,700 violations of state laws in about 135,000 claims that were examined. Those claims were among about 1.1 million handled by the company from July 1991 to January 1994.
In January, Trigon changed its billing practices to pass on savings to its about 1.8 million customers. On July 1, a new law went into effect that requires all insurance companies to use this method of calculation.
The $5 million settlement, which Trigon said will be paid out of its $600 million-plus surplus, will go to the state's school-construction fund.
Landmark News Service and The Associated Press contributed information to this story.
by CNB