NU Online News Service, Dec. 8, 2004, 9:43 a.m. EST

The managed care unit of a Philadelphia insurer will be paying $481,245 back to the state of Connecticut to correct a series of billing mistakes.[@@]

CIGNA Corp. says the unit, CIGNA HealthCare, also will pay Connecticut $390,000 in interest in response to the discovery of the errors in the way the unit charged the state of Connecticut Employee and Retiree Dental Benefits Plan for dental coverage between 1989 and 2004.

Connecticut Attorney General Richard Blumenthal held a press conference Tuesday to announce the $871,245 agreement with CIGNA HealthCare over the billing problems.

Blumenthal has been working with other regulators to review insurance broker compensation practices in recent months.

CIGNA is taking pains to emphasize that it believes the current commission reimbursement agreement has nothing to do with the broker comp investigations.

Blumenthal sent CIGNA a subpoena in November after a review of the CIGNA dental plan uncovered possible billing problems, and Blumenthal says he is continuing to look at CIGNA’s activities.

But the $871,245 payment “is not a result of ongoing investigations about contingency commissions,” CIGNA says in a statement about the Connecticut repayment agreement. “There was no intentional misconduct on the part of CIGNA or any past or present CIGNA employees. CIGNA cooperated fully with the state by bringing this issue to light, by cooperating fully with the attorney general both before and after he issued a subpoena in November, and by moving quickly to correct the identified error.”

CIGNA says it had been asking to meet with Connecticut officials to review dental plan rate components since March 2004.

“When the attorney general and the comptroller expressed their concerns about these payments, CIGNA moved quickly to address the situation and offered reimbursement,” CIGNA says. “It is important to note that CIGNA’s relationship with the state is a result of a competitive bidding process and arms-length negotiations. The state’s dental business has gone out to bid periodically during the years and in each case, CIGNA has offered a competitive rate that made it the best value for state employees.”

Thomas Woodruff, director of the retirement and benefit services division at the Connecticut Office of the Comptroller, says Connecticut has information in its files that shows that CIGNA had agreed in 1990 not to charge commissions. Information obtained through a subpoena, including a cover letter to a broker, supports the argument that CIGNA and its underwriters knew about the commmissions being paid, Woodruff says.