Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, July 21, 1994 TAG: 9407210087
SECTION: VIRGINIA PAGE: C-1 EDITION: METRO
SOURCE: Associated Press
DATELINE: RICHMOND LENGTH: Medium
The state Bureau of Insurance probe concluded that Trigon, known until recently as Blue Cross-Blue Shield of Virginia, broke state laws thousands of times when handling claims from July 1991 to January 1994.
Blue Cross frequently obscured benefits, coverages and provisions of its contract and misrepresented facts about its policy coverages, a draft of the report said. The attorney general's office, which is preparing its own report on the insurer, released a summary of the insurance bureau's initial findings Wednesday at a news conference.
The company responded with a harshly worded news release denying any wrongdoing.
"Suggestions appearing in the newspaper reports that we have solicited or received kickbacks or engaged in illegal or unethical behavior are irresponsible and inexcusable," Trigon Chairman and Chief Executive Officer Norwood H. Davis said in the release. "We comply with the laws of the Commonwealth of Virginia and we have not knowingly committed any violation of state laws."
The report said Trigon probably could be driven into bankruptcy by staggering numbers of fines, an assertion the company disputed. Each violation could result in a fine of up to $5,000.
But Gilmore said he is not ready to recommend any penalties - civil or criminal - until his office completes its own investigation. No date for that has been set.
``We are going to continue to follow the investigation wherever it leads,'' he said. But ``I think it's far too premature to do anything like that.''
Gilmore also said that his office would prefer to leave the matter of penalties up to the State Corporation Commission.
``We believe that the penalties are under the purview of the regulator,'' Gilmore said. But the attorney general's office will stay involved because ``we have a duty under the statute to be the consumer's advocate,'' he said.
A more extensive report would have to be conducted before it could be determined if consumers were owed money, Gilmore said.
Ken Schrad, a spokesman for the State Corporation Commission, said there were no plans for action against Trigon until the insurance bureau has developed more information. Insurance Commissioner Steven T. Foster declined to give any timetable Wednesday on the continuing investigation.
Blue Cross allegedly negotiated fees with hospitals so low for some services that its policyholders paid their entire cost and then some. With the leftover money, some hospitals awarded a credit to the company, the report said.
Gilmore declined to call the transactions kickbacks but said rules clearly were violated.
``The policyholder was paying a co-payment [and] a credit was coming back'' to the insurer, he said. ``That is not right.''
Trigon spokesman Jim Goss said that the insurer would make no other statements until speaking about the report with Foster and the attorney general's office.
According to the report, Blue Cross handled about 1.1 million claims during the 21/2-year period and that in most instances it paid less than the amounts represented on its statements to policyholders.
Scrutiny of 135,000 of those claims turned up about 2,700 violations of state laws, according to the report.
Both Gilmore and Foster launched investigations last winter after a story in the Richmond Times-Dispatch said policyholders seldom benefit from the discounted charges that Blue Cross negotiates with hospitals because it provides such a large volume of patients.
The company has about 1.8 million policyholders.
Trigon responded to the investigations by agreeing to begin basing co-payments on the discounted fees it negotiates with health care providers.
Early this year, the General Assembly passed a law, which went into effect July 1, that requires insurance companies to pass on such savings to their policyholders.
by CNB