News Release

New Jersey Department of
Banking and Insurance
Commissioner Holly C. Bakke

For Immediate Release:  October 7, 2003

For Further Information::  Ellen Lovejoy - (609) 292-5064


TRENTON - Banking and Insurance Commissioner Holly C. Bakke today announced that Horizon Healthcare of New Jersey, Inc. has resolved claims-handling violations cited by the Department.

The Department released findings and recommendations of its Market Conduct Examination, which revealed claims-payment and other violations by Horizon Healthcare.

As a result of the Department's examination, Horizon Healthcare took corrective action to ensure that the objectionable actions are not repeated. Horizon is also paying a $200,000 fine imposed by the Department and offering a child immunization program requested by Commissioner Bakke. The fine would have been higher if Horizon Healthcare had not demonstrated cooperation in taking corrective steps.

"The Department protected consumers by gaining Horizon's cooperation in correcting the problems found in the examination," Commissioner Bakke said. "The company followed our recommendations, took responsibility for the problems and instituted reforms."

Commissioner Bakke said she is particularly pleased that the company honored her request to sponsor a child immunization program in Newark. Horizon Healthcare, as part of its World Class Clinical Quality initiative and in cooperation with licensed health care providers, will establish, publicize and fund an immunization program with a site in Newark. Under the program, which will last at least one week before the end of 2003, health care professionals will dispense childhood immunizations to residents of the city.

The Market Conduct Examination, which was conducted from April 2000 to March 2001, revealed that Horizon Healthcare failed to pay 18 percent, or 297,946, of clean claims within minimum time frames specified by statute. In a comprehensive review of randomly selected claims, the examiners found 8 percent that did not meet the time frames.

Late claim payments require 10 percent interest. While Horizon did pay the interest, it was cited for improper general business practice because it failed to pay interest within minimum time frames. A database query of denied claims revealed a failure to deny 231,885, or 21 percent, of claims within minimum time frames specified by statute. A comprehensive review of randomly selected denied claims showed that 15 percent did not meet the timeframe. Horizon was also cited for failure to provide reasonable explanations for claim denials.

State law requires health plans to pay properly completed claims within 40 days of receipt if the claim was mailed, or within 30 days of receipt if the claim was submitted electronically. The same time limits apply to denials due to incomplete or improperly completed claims.

In addition to the claims-related violations, the HMO also was cited for failure to promptly respond to direct complaints as well as complaints from the Department.

"Market Conduct Exams are critical to protecting consumers in the insurance marketplace because they make companies correct bad practices and institute reforms," Commissioner Bakke said.

The Department will continue to monitor Horizon Healthcare's business practices, and the company has retrained personnel as to payment rules and timeframes.

The Department in November imposed a $200,000 fine against Cigna HealthCare of New Jersey after a Market Conduct Exam revealed claims-handling violations. The Department also previously cited Health Net of New Jersey Inc. for failing to provide mandated infertility benefits and for using an outdated fee schedule to reimburse providers and consumers. Health Net, an HMO formerly known as PHS Health Plans, agreed to reimburse providers and members $814,000 plus interest and agreed to pay a $60,000 fine ordered by the Department.

Commissioner Bakke explained that Market Conduct Examinations are designed to accomplish four goals: to ensure that policyholders get what they pay for; to identify areas in which a company is performing well, and encourage those practices in the future; to identify immediate corrective actions that a company must implement, including the payment of restitution; and to provide a basis for the implementation of sanctions for violations of law.