Washington state to bar insurer from writing new coverage

(Updated -- see note at bottom of this post.)

Washington State Insurance Commissioner Mike Kreidler has issued an order barring Ability Insurance Company, of Omaha, Neb., from writing new policies in Washington for the next six months.

The order, issued Wednesday, takes effect in 10 days.

The order stems from the company’s failure to honor long-term care coverage that lapsed after a senior citizen with dementia failed to make her payments. In such situations, state law allows a consumer to reinstate coverage within five months of the policy’s lapse.

“Situations like this are exactly why we have this law,” said Kreidler. “It protects people who, through no fault of their own, have lost the ability to keep up with their financial records.”

The suspension does not affect the company’s duties under current policies. The company can also continue to renew existing policies.

In this case, the company on March 20, 2009 sent the woman a notice of non-payment, warning that her policy would lapse unless paid within the next 35 days.

When her daughter called the company about a claim on Aug. 4, 2009 – well within the five-month period – the company failed to tell her that the policy had lapsed. The daughter didn’t learn of the lapsed policy until she checked her mother’s mail in September. This was still well within the five-month period.

Nonetheless, the company refused to reinstate the coverage. It contended that the five-month window started the day the premium was due, not at the end of the 35-day period mentioned in its March 20 letter.

Also Wednesday, Kreidler issued a cease-and-desist order telling the company to stop violating state law in such cases. He is also imposing a $10,000 fine on the company.

The company has the right to demand a hearing.

Update on May 4, 2011: Ability has requested a hearing, which automatically stays the suspension pending the outcome of the hearing.

Second update: On June 6, 2012, Kreidler's order was upheld, meaning that the company's authority to write new business was suspended for six months. The company was also fined $10,000.

How to file an appeal when a health insurer denies your claim

Picture this: Your 24-year-old daughter is seriously injured in a snowboarding accident. She suffered head injuries. She's heavily sedated. Your doctor wants to do urgent surgery to stem internal bleeding. It will be costly. But your health insurer refuses to authorize the surgery.

What do you do?

In the past, your options were to pay for the procedure yourself, get another opinion that will be less costly or do nothing. All are bad choices and time is critical.

We've posted a new "appeals kit" designed to help when insurers deny requests to authorize a particular service -- or to pay a claim afterward. The site can help you challenge decisions and appeal denials. We're one of the first states to compile this information into a one-stop, consumer-focused site.

In the case above, you'd have several choices:

• File an urgent appeal with your health insurer.
• If the insurer still says no, you can appeal to an independent third-party group made up of health care professionals. They can overrule your insurance company and make it pay. (Over the last three years, nearly 1 in 4 appeals that were sent to an independent review organization by a health plan ruled in favor of Washington consumers.)
• You can sue.
• Or you can file a complaint with our office. 

All this can be complicated, depending on your type of coverage, type of appeal, and the timeline. But the online guide walks you through those options, with a handy worksheet to keep track of key information, etc.

Check it out.
(Corrected two links. Thanks to Public Data Ferret for the heads-up.)

How to find old life insurance policies (and other unclaimed property)

The case: A woman recently called us, trying to track down a life insurance policy that her grandmother had bought in 1971. The policy had been sold by one company to another.

"Makes me wonder how many policies go unclaimed," she said.

A lot. According to the New York Times, hundreds of millions of dollars each year.

So how do you track down a relative's old policy?

• Gather as much information as possible: name, insurer and any relevant documents. Try to find the policy itself, which will have a number on it. Make sure you have a copy of the death certificate.

• Tip: If you can't find the company, try going through the person's financial records, looking for payments made to an insurer. Also, look through old mail -- the company may have sent periodic statements or billing reminders. If you know which company they had their auto= or homeowners coverage with, consider contacting that company. People often use the same insurer for life insurance.

• Then, make sure the company still exists, or if it merged with another company. If you live in Washington state, we can help with this, for free. Call us at 1-800-562-6900. If you live in another state, call your state's insurance regulator for help.

• If you can't find any information, even the name of the company, you may want to pay a search company to run your relative's name against insurance industry databases or to contact a large number of insurers directly.

• If the policy goes unclaimed for a long time, insurers are supposed to turn the money over to state unclaimed property funds. Run your relative's name through these free, state-run online search sites. Here's Washington state's official unclaimed property site. And here's a list of similar official unclaimed property sites in other states.

• Tip: Online companies can also search for unclaimed property for you, but with a little time at your computer and the sites listed above, you can do the same thing, for free, yourself.

As for that life insurance case, we helped the woman figure out the current company holding the policy and file a claim.

"This is incredible," she wrote. "We can't thank you enough."

Bonus round: Here are our tips if you're buying life insurance or an annuity.

8 things to know about pet insurance -- and what's it cost?

1) What's it cost? Here in Washington, according to rates filed with our office:

• Coverage for cats ranges from $83 to $926 a year; most policies are $150-$250 annually.
• Coverage for a dog ranges from $107 to $1,059 a year, but most coverage is between $225 and $400 annually.

2) Coverage varies a lot. Some policies cover a broad range of things: accidents, sickness, surgery, x-rays, drugs, hospitalization, cancer treatment, etc. Others are much narrower, covering accidents and illness after a waiting period.

3) Look for exclusions. Insurers consider hereditary conditions pre-existing conditions and may exclude them or limit coverage. They may also exclude or limit coverage for incurable conditions like diabetes or cancer.

4) Qualifying: A vet may have to examine your pet and certify its health before you can insure it.

5) The rules can change when the policy renews. If your pet's treated for something, some insurers may consider that a pre-existing condition when the policy renews, meaning they'll exclude coverage for it.

6) And they can change based on your type of pet. Exclusions may vary by type of pet and breed.

7) Who pays the bills? Some companies will pay the vet directly, but often you'll be responsible for the full amount at the time of treatment.

8) Which vet? Some insurers will require you to use a specific network of vets.

For more specifics, please see our pet insurance page.

Two agents lose their licenses for misappropriating clients' money

Insurance Commissioner Mike Kreidler has taken action against two insurance agents who misappropriated thousands of dollars from their clients.

• Nancy M. Bishop, of Puyallup, has been notified that the insurance commissioner’s office refuses to renew her insurance license. She has been barred from doing insurance business in Washington and ordered to repay consumers more than $131,000.

A state examination of Bishop’s business records revealed that she violated state insurance laws in dozens of instances, including repeatedly accepting premium payments for policies that did not exist, and keeping the money herself. She also wrongly kept some clients’ refunds and issued false certificates of coverage.

The examination found that Bishop owes dozens of Washington consumers more than $131,000, including overcharges and misappropriated funds.

The violations, according to Kreidler’s order, show Bishop to be “untrustworthy and a source of injury and loss to the public and not qualified to be an insurance producer in the state of Washington.”

• Isaac Mayanja, an agent in Redmond, has had his insurance license revoked.
In 2010, a state investigation determined that Mayanja sold at least 19 unapproved annuities to Washington residents. He also repeatedly engaged in the unauthorized withdrawal of clients’ funds, including forgery and misappropriation of their money.

Specifically, he submitted withdrawal forms totaling $15,570 for several clients’ annuities, changing their addresses on the forms to his own address and then transferring the money to his own personal bank accounts.

In both cases, the agents have the right to demand a hearing. The orders take effect immediately.

Important: Open enrollment for many kids ends April 30th

We cannot say this enough: If you want to buy an individual health plan for your child or enroll them in your individual health plan, you have until April 30 to do it. Do not delay.

Individual coverage is typically bought by people who don't have access to employer-sponsored coverage, or whose employer doesn't cover dependents.

The next open-enrollment period for kids this year won't be until Sept. 15 through Oct. 31.

For more on this, please see our March 14 news release.

Seattle couple pleads guilty in storm-damage insurance scheme

The owners of a Seattle construction company have pleaded guilty to attempted theft for an insurance-billing scheme based on inflated storm-cleanup bills.

James and Cheryl-Lin Philo pleaded guilty March 25th in King County Superior Court to two counts of second-degree attempted theft. In addition, their company, Philo Construction Co., of Seattle, is guilty of one count of first-degree theft.

An investigation by Insurance Commissioner's Mike Kreidler's anti-fraud unit found dozens of cases of apparent fraudulent billing by the company.

Here's what happened: In December 2006, a major windstorm swept across Washington, knocking down trees and causing substantial damage to a numerous homes. The Philos hired subcontractors to remove many of those trees from customers’ homes.


In March 2007, a former employee contacted our office, saying that Philo was submitting inflated invoices to insurers. Other workers provided information as well.

An investigation by the agency’s Special Investigations Unit, working with more than 15 insurance companies, found that the Philos had been asking their subcontractors for two invoices for each job. The Philos paid the subcontractors the smaller amount, and then submitted the larger invoice to their customers’ insurance companies for reimbursement.

The markup averaged close to 30 percent, plus another 20 percent that insurers allow for profit and overhead. For example, a $2,150 bill from a tree service company was reported to the insurer as a $2,795 job. Once profit, overhead and sales tax were added, the Philos were paid a total of $3,649.

The Philos also created a fictitious company, Pro Line Construction Resources, to act as a subcontractor when they needed to support a particularly high estimate.

The Philos were each assessed a $500 victim penalty assessment. They'll also pay restitution totalling $19,849.15, and $220 in court costs.

Samaritan Ministries ordered to stop offering unauthorized insurance in Washington state

This post has been updated. See below.

Washington state Insurance Commissioner Mike Kreidler on Friday ordered a health-care sharing ministry to stop offering unauthorized insurance in Washington.

Illinois-based Samaritan Ministries International, a nonprofit corporation, maintains that its member “need-sharing” program is not insurance. Under Washington state law, however, the program is considered insurance.

Insurers doing business in Washington must register with the state, submit their policies and rates for review, and meet state financial solvency requirements. Samaritan Ministries hasn’t done any of those things.

Kreidler on Friday issued a cease-and-desist order telling Samaritan to stop engaging in the unauthorized business of insurance in Washington state, which includes organizing the transfer of money between members.

“Our insurance laws exist to protect consumers and make sure that insurers live up to their promises,” said Kreidler. “Members of groups like this don’t have those protections.”

Samaritan Ministries members agree to pay monthly shares of $135 to $320 to other members who have medical costs, plus a $170-a-year administrative fee. A separate program is available to cover auto-accident injuries.

Members submit medical claims, and the group directs members to send their money to members with medical bills. The group says it has a total of 15,500 members in all 50 states, with shares totaling about $3.5 million per month.

The cease and desist order includes Samaritan Ministries International, its Christian Health Care Newsletter and 20 individuals.
Samaritan Ministries has the right to demand a hearing. The order takes effect immediately.

Update (5/31/2011) The order has been rescinded. On May 11, 2011, Washington Gov. Chris Gregoire signed Senate Bill 5122 into law, excluding health sharing ministries such as Samaritan from regulation under the Washington state insurance code.