Central United Life Challenging Suit by Mo. Regulators Over Cancer Policy Payments

Central United Life Insurance Co. plans to challenge a lawsuit filed by Missouri insurance regulators accusing the company of illegally changing the terms of its cancer insurance policies.

The suit, filed in Cole County Circuit Court, alleges the Arkansas-based life insurer changed its claims-handling practices in late 2003 to sharply reduce payments to policyholders who get cancer treatment, the state Department of Insurance said.

The insurance contracts at issue are specified-disease policies that Central United has sold since 1997, the department said. The policies promise to pay Missouri policyholders diagnosed with cancer the amount charged for their medical care, even if their health insurance pays for the treatment.

Central United is attempting to avoid paying thousands of dollars due to each of these policyholders by paying them based on paid treatment costs, instead of actual charges, the department contends.

In a statement, John McGettigan, senior vice president at Central United, said the company will soon appeal the department's suit For more than six years now, Central United has been in discussions with the Missouri Department of Insurance on the issue, he said.

"Contrary to its current position, the Missouri Department of Insurance in 2003 and 2005 issued written statements that supported Central United's method of payment of actual charge benefits to policyholders based upon the real amounts paid and accepted as payment in full instead of the list prices providers are ethically, legally and/or contractually forbidden to charge most patients," McGettigan said.

The suit wants the court to order Central United to review its claims for cancer policies written before 2003 and pay restitution to affected policyholders. It also seeks monetary penalties to be paid to the state public school fund, as required by Missouri law.

"There are few events more life-changing than cancer, and this arbitrary decision by Central United is an attempt to abandon its solemn responsibility to protect its policyholders facing a serious and sometimes deadly illness," said John M. Huff, director of the Missouri Department of Insurance, Financial Institutions and Professional Registration, in a statement.

According to McGettigan, a law recently passed in Missouri, and several other state laws, supports Central United's position on the issue. "Central United's payment of actual charges benefits is consistent with policy language and supports making supplemental insurance more affordable for all policyholders," he said.

Central United Life Insurance, which is a member of Manhattan Insurance Group based in Texas, currently has a Best's Financial Strength Rating of B+ (Good).