Daily Insurance Report  
Walt Bernard Podgurski,  Editor,  440-773-1108,  Walt@DailyInsuranceReport.com

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Friday, 08/18/17

Blue Cross Michigan Hit With Flurry of ERISA Lawsuits - more than 200 ERISA cases have accused Blue Cross of charging hidden health plan fees.
By Jacklyn Wille
Blue Cross Blue Shield of Michigan has been sued more than 30 times in the past week by employers that say the insurer skimmed unauthorized fees from their health plans.
The lawsuits, filed between Aug. 9 and 11 in federal court in Michigan, accuse Blue Cross of charging hidden and unauthorized fees to the employers’ health plan assets as a means of improving its financial position without alienating customers. The lawsuits build from a 2014 appeals court decision holding Blue Cross liable for this conduct under the Employee Retirement Income Security Act and upholding a $6 million judgment against the insurer.

Life / Health / Employee Benefits

Cigna Ordered to Pay More Than $13 Million in Out-Of-Network Healthcare Provider Billing Dispute
There has been a dramatic rise in the number of lawsuits involving billing disputes between plans subject to the Employee Retirement Income Security Act (“ERISA”) and out-of-network healthcare providers. Certain third-party claims administrators for the ERISA plans are proactively suing out-of-network healthcare providers for alleged fraudulent billing practices. Connecticut General Life Insurance Company and Cigna Health and Life Insurance Company (collectively, “Cigna”) is one of the most proactive of those claims administrators.
In Connecticut General Life Insurance Company v. Humble Surgical Hospital, LLC, CA No. 4:13-cv-03291 (S.D. Tex. June 1, 2016), Cigna sued Humble Surgical Hospital, LLC, a physician-owned hospital (“Humble”), to recover alleged overpayments made to Humble due to fraudulent billing practices in violation of both ERISA and state common law. After a nine-day bench trial, Judge Kenneth Hoyt of the U.S. District Court for the Southern District of Texas denied Cigna’s request for reimbursement for alleged overpayments, and awarded Humble more than $13 million to cover certain alleged underpaid claims and ERISA penalties. The court’s decision relied primarily on two findings. First, the court determined that Cigna improperly applied the “exclusionary language” contained in the plans it administered. Second, the court determined that Cigna failed to establish that the relevant language in the plan documents created a constructive trust or equitable lien.

Nationwide commits more than $100M to next gen insurance and financial services
Terrance Williams

Self driving cars. Artificial intelligence. Smart homes. The future of insurance protection and financial planning is changing rapidly.
That's why today, we announced our commitment to invest more than $100M of venture capital in customer-centric solutions that help our members:
Live comfortably in retirement
Meet their insurance and financial needs in novel and digital ways
Protect their data and digital assets
Protect them in the evolving area of mobility

Trump Caves on Obamacare Subsidies
Faced with potentially devastating consequences for the health insurance market, President Trump reversed course on threats to end Obamacare subsidies in August.
Andrew Desiderio
The White House announced on Wednesday that President Donald Trump would issue Obamacare insurance subsidies for the month of August, succumbing to pressure from lawmakers of both parties who warned of a collapse of the insurance exchanges if the subsidies were cut off.
The subsidies, known as cost-sharing-reduction (CSR) payments, help offset costs for insurers and poorer Americans. For weeks, Trump threatened to end the CSR payments, a strategy that health care experts said injected uncertainty into the private insurance markets. Experts and lawmakers from both parties have warned that premiums would skyrocket and insurers would pull out of the exchanges altogether.
Still, Trump’s stated strategy on Obamacare was to let the law “implode” and force Democrats to come to the table to help fix it. Sen. Tom Carper (D-DE) warned that if Trump tries to sabotage Obamacare for his personal political gain, the success or failure of the 2010 law will rest on his shoulders.

Sticker Shock: Iowa's only ObamaCare insurer seeks 57 percent rate increase
Barnini Chakraborty
In June, Iowa's Medica sent a letter to its customers explaining it was seeking a 43.5 percent rate hike, affecting about 14,000 Iowans. The company spelled out the steep premium increases but offered customers assurances that federal subsidies would shield most them from forking over thousands more a year.
Since then, however, Medica has revised the proposed hike to 57 percent – citing once again uncertainties over federal health care subsidies.

ObamaCare, Not Trump, Is Causing ObamaCare's Massive Rate Hikes
Investor's Business Daily

In Iowa, the state's sole remaining insurer announced on Thursday that it wants to boost ObamaCare premiums by 57%. This isn't exactly the vibrant, competitive, low-cost market that Democrats promised. But it is the inevitable outcome of ObamaCare's government-knows-best approach to health care.
Earlier this year, Aetna and Wellmark Blue Cross & Blue Shield announced that they were pulling out of Iowa's ObamaCare exchange, leaving only Medica, which was also threatening to leave. Not surprisingly, Medica has used its newfound monopoly status to push for increasingly higher rates, while trying to pin the blame President Trump for the increases.
The media, of course, are happy to buy into it that claim. Anything to bash Trump.
But Iowans shouldn't. Nor should anyone else in the country who heads to the exchanges later this year only to find — for the third year in a row — there are fewer choices and record-breaking premium hikes.
The seeds of today's double-digit premium increases and collapsing competition were planted long before Trump took the oath of office. In fact, they were embedded right there in the law President Obama signed in 2010.

The healthcare debate we’re not having
The headlines from Capitol Hill give the impression that Congress is debating the future of U.S. healthcare. That’s somewhat misleading. The debate is about health insurance, not healthcare.
It is an important distinction. Insurance is a ticket to enter the healthcare system. Healthcare is what the system delivers. To be sure, if Congress rolls back insurance coverage, it will prevent millions of Americans from gaining timely access to healthcare. That is a bad outcome in itself and worthy of the attention it’s getting.

General Insurance News

Hellman & Friedman explores insurance broker HUB stake sale: Reuters
U.S. buyout firm Hellman & Friedman LLC is exploring the sale of a stake in HUB International Ltd in a deal that could value one of the largest North American insurance brokerages at between US$6 billion and US$7 billion, including debt, people familiar with the matter said.
The move follows Hellman & Friedman’s acquisition of HUB four years ago from another private equity firm, Apax Partners LLP, for US$4.4 billion including debt. It indicates Hellman & Friedman’s likely interest in cashing out partly on that investment, while keeping HUB in its investment portfolio.

OneDigital Named To Inc. 5000 For Eleventh Consecutive Year
OneDigital, the nation's largest employee benefits-only company, has been selected for the eleventh consecutive time to Inc. 5000’s distinguished listing of America’s fastest-growing private companies. OneDigital’s record performance year-over-year is a testament to the organization’s financial and organic growth. The firm continues to expand its national footprint adding presence to new markets and increasing its offices by 30 percent in the last year.

DOL fiduciary rule compliance costs exceed $4.7 billion: SIFMA study
Broker-dealers report paying hefty start-up costs and additional ongoing expenses, and are cutting the number of mutual funds they offer
The brokerage industry will spend more than $4.7 billion in start-up costs relating to the Department of Labor's new fiduciary rule, far exceeding the DOL's estimated costs for broker-dealers of $2 billion to $3 billion, according to a study issued Thursday by the Securities Industry and Financial Markets Association, a trade group representing Wall Street.
Litigation risk has been a key driver in business and compliance decisions across the brokerage industry, according to the study, which was completed by Deloitte & Touche for SIFMA.

Disruption is a reality for the insurance sector
New technologies such as the Internet of Things (IoT) have long been predicted to cause noteworthy change for the insurance industry. However, according to Capgemini’s World Insurance Report, traditional insurers are underestimating the demand from Generation Y customers for connected technologies. This opens the door for non-traditional competitors to walk in and lure away customers with attractive connected technologies and personalised service. Generation Y is creating an unprecedented issue for traditional insurers. As this demographic becomes a customer base for the industry, they are demanding a different customer experience – one that requires a significant shift towards connected communication services that is far removed from the traditional manner insurers have gone about selling products to this generation’s parents and grandparents.


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Walt Bernard Podgurski - - Editor