New York fines 15 insurers $2.7 million for violating Timothy’s Law

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New York insurance regulators fined 15 insurers a total of $2.7 million for failing to notify small businesses of their eligibility to buy special coverage.

The insurers who failed to comply with the provisions of Timothy’s Law are the first to be fined since the law’s enactment in 2007, according to Benjamin M. Lawsky, superintendent of the New York Department of Financial Services.

The law requires insurers tell small businesses the option of purchasing extended mental health benefits when they buy or renew their basic health insurance plans.

The fines imposed include:

  • Oxford/United, $1.31 million
  • Empire Health Choice, $480,440
  • HealthNet, $260,680
  • MVP, $215,630
  • HIP, $187,570
  • Independent Health, $112,350
  • HealthNow, $101,640

The violations occurred during calendar 2009 and 2010, officials said, noting that additional insurers were polled and found not to have violated the law.

The companies were found not to have willfully evaded the law. They also agreed to correct the problems leading to the violations, Lawsky said.

The violations were uncovered when the department began investigating complaints from a number of small businesses. The businesses said they would have purchased the coverage for their employees, but were never advised of that option when they purchased or renewed their basic health insurance plans.

“Mental illness can have devastating consequences for families,” Lawsky said in a statement. “It’s essential that people understand that insurance benefits are available for treating mental illnesses and that businesses know this option is available.”

Under Timothy’s Law, insurance plans – for both large-employer groups and those with fewer than 50 employees — are required to provide 30 days of inpatient treatment and 20 days of outpatient visits for mental health treatment.

Large group plans with more than 50 employees are mandated to provide coverage for treating biologically based mental illnesses and children with serious emotional disturbances at a level that is comparable to coverage for non-mental health conditions.

The law requires insurers to offer small groups the option of buying this level of comparable coverage as an extended benefit. Small groups are those with fewer than 50 employees.

Timothy’s Law is named for Timothy O’Clair, a 12-year-old boy from Schenectady County who took his own life in 2001 when his family was unable to obtain adequate mental health treatment needed for their son.

The department’s investigation found that the violations occurred during calendar years 2009 and 2010. In addition to the insurers fined, Department examiners also polled additional insurance companies, but those companies were not found to have failed to provide the required written notifications.

Shelly Nortz, steering committee member for the Timothy’s Law Campaign and deputy executive director of the Coalition for the Homeless, said the group was “pleased” that its concerns about insurers complying were taken seriously.

The companies within the larger health plans that were fined include: Empire HealthChoice Assurance, Empire HealthChoice HMO, HealthNet Insurance Company of NY, HealthNet of NY, HealthNow New York, HIP Insurance Co., HIP of Greater New York, Independent Health Association, Independent Health Benefits Corp., MVP Health Insurance Co., MVP Health Plan, Oxford Health Insurance, Oxford Health Plan Preferred Care (RAHMO) and United HealthCare Insurance Company of NY.

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