North Carolina hits Blue Cross Blue Shield with record $3.6 million fine

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The North Carolina Department of Insurance has slapped the state's Blue Cross Blue Shield with a $3.6 million penalty for IT problems that allegedly resulted in poor customer service for both its members and providers, according to the insurance commissioner.

The $3.6 million is part of a voluntary settlement agreement, Insurance Commissioner Wayne Goodwin said Thursday. The money will come out of Blue Cross Blue Shield of North Carolina's surplus and per the agreement, will not affect customer premiums.

The $3.6 million fine is on top of  $11.3 million BCBSNC paid to customers in restitution and at least $8.3 million paid to providers in interest from late reimbursements, according to the four-page agreement, as reported by The News & Observer.

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Since January, the insurance department has received numerous complaints from Blue Cross Blue Shield of North Carolina members and providers over issues related to alleged poor customer service, the insurance commissioner said.

Complaints included: the department was not readily available by telephone or through its website; consumers did not receive valid identification cards or proof of coverage; consumers experienced problems in billings, crediting of premium payments; incorrect policy cancellation notices and difficulty obtaining premium refunds due; customers did not receive timely renewal notices of their policies with explanations of coverage changes.  

Blue Cross Blue Shield North Carolina said by statement: "We've reviewed the Department of Insurance's Voluntary Settlement Agreement and are prepared to pay the amount for our technological problems. We have been actively addressing these issues, and expect to be stronger as a result of this process. We remain committed to our customers and the communities of North Carolina, and are deeply sorry for the challenges that this created for our customers and providers."

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The insurance department is assisting consumers as needed.

"As your Insurance Commissioner, and an advocate for consumers across North Carolina, Blue Cross Blue Shield had to be held accountable," Commissioner Wayne Goodwin said. "A record fine has been paid."

The fine is almost double the previous amount paid.

The insurance department and insurer agreed on the fine amount last week, ending a six-month investigation in which Blue Cross had challenged the state's findings of wrongdoing, according to The News & Observer.

Twitter: @SusanJMorse