Blue Shield of California to Pay $2 Million Legal Settlement for Illegal Policy Rescissions

California health insurance provider, Blue Shield, a San Francisco-based not-for-profit company, agreed to pay $2 million to the City of Los Angeles to resolve accusations that the insurance company improperly dropped policyholders after they got sick and needed expensive treatment. The settlement ends an investigation into more than 1,000 so-called rescissions by Blue Shield.

According to evidence presented in court filings, Blue Shield improperly dropped policyholders and paying customers without regard for whether their customers intended to deceive them about preexisting conditions. The practice resulted in some people losing coverage through no fault of their own, often over trivial bits of health history that had nothing to do with the claims that triggered the investigations.

President Obama made rescission a central theme in his push for a healthcare overhaul. In September 2010, a ban on rescissions for unintentional application errors became one of the first pieces of the healthcare law to take effect.

Blue Shield, in earlier agreements with state regulators, pledged to pay $3 million and to offer new coverage to hundreds of former policyholders. In recent years, Blue Shield is among a handful of California insurers that have paid millions to state and local regulators in response to investigations into the systematic dropping of policyholders with expensive medical needs.

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FTC Decision and Order against Milliman, Inc. (2008) (Fair Credit Reporting Act)

On February 6, 2008, the Federal Trade Commission filed a decision and order of their complaint against Milliman, Inc. (In the Matter of MILLIMAN, INC., A CORPORATION. DOCKET NO. C-4213).

CONSUMERS should be aware that one of Milliman, Inc.’s information exchange products, IntelliScript, is:

“a data aggregation service that provides individual medical profiles, including, but not limited to, prescription drug purchase histories of insurance applicants, to health and life insurance companies. The medical profile generated by IntelliScript includes, but is not limited to: all prescription drugs, including dosage and number of refills filled by the insurance applicant for the previous five years. It also includes, for each drug, the name and address of the dispensing pharmacy, as well as the name and address of the prescribing doctor, including medical specialty. The medical profile generated by IntelliScript analyzes the individual’s prescription drug history and provides a “map” of the risk levels associated with each drug, based on information provided by the insurer.” (Source, FTC complaint)

Furthermore, the Federal Trade Commission avers that Milliman, Inc.’s, in providing medical profiles generated by IntelliScript to insurers, is:

“Now and has been a consumer reporting agency, as that term is defined in Section 603(f) of the Fair Credit Reporting Act, 15 U.S.C. §1681a(f), because it regularly engages in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties for monetary fees, dues, or on a cooperative nonprofit basis. Milliman, Inc. furnishes these consumer reports to third parties through the means or facilities of interstate commerce.”

The public FTC decision and order is reprinted below, in full:

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New Credit Card Law Will Curb FreeCreditReport.com Ads

The credit card reform bill signed into law by President Obama on May 26, 2009 attempts to put a stop to several unfair practices of the credit card industry — it also targets misleading advertisements for phony “free” credit reports.

The “free credit report” advertised non-stop on cable television, it bears repeating, isn’t free at all.  The law calls for the Federal Trade Commission to issue new rules that will force free credit report advertisers to inform consumers that the only place for a free credit report is AnnualCreditReport.com.

Television and radio ads will also be required to include a pretty deflating statement: “This is not the free credit report provided for by Federal law.” (more…)

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Experian Consumer Direct Settles FTC Charges over Consumerinfo.com & FreeCreditReport.com

On August 16, 2005 , the most prolific marketer of paid credit report services, Experian Consumer Direct, has settled Federal Trade Commission charges that it deceptively marketed “free credit reports” by not adequately disclosing that consumers automatically would be signed up for a credit report monitoring service and charged $79.95 if they didn’t cancel within 30 days, in violation of federal law. The settlement requires Consumerinfo to pay redress to deceived consumers, bars deceptive and misleading claims about “free” offers, requires disclosure of terms and conditions of any “free” offers, and requires the defendant to give up $950,000 in ill-gotten gains.

According to the FTC complaint, the defendant drove consumers to their www.freecreditreport.com and www.consumerinfo.com Web sites with radio, television, e-mail and Internet ads that promised free credit reports and a bonus – free trials of a credit-monitoring service. Ads made claims such as:

FREE! FREE! FREE! Get Your FREE Credit Report Online in Seconds!!!!
Click here to get a FREE copy of your online Credit Report Instantly!
And that’s not all. . . along with your INSTANT credit report, we’ll give
you 30 FREE days of the Credit Check Monitoring Service at no obligation.

Consumers were required to provide detailed personal information and a valid credit card account number to get their credit report. They were assured that, “Your card will not be charged during the free trial period. However, valid credit card information is required to establish your account.”

According to the FTC’s complaint, Consumerinfo’s advertising and Web sites failed to explain adequately that after the free trial period for the credit monitoring service expired, consumers automatically would be charged a $79.95 annual membership, unless they notified the defendant within 30 days to cancel the service. Consumerinfo billed the credit cards that it had told consumers were “required only to establish your account,” and, in some cases, automatically renewed memberships by re-billing consumers without notice. The FTC charged that the defendant’s failure to adequately disclose the automatic billing and to get consumers’ consent to bill their accounts violated federal law.
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Ingenix Inc. & Milliman Inc. Agree to Comply with Fair Credit Reporting Act

On September 17, 2007, two providers of consumers’ medical profiles used in determining eligibility for life and health insurance agreed to settle Federal Trade Commission charges that, as consumer reporting agencies (CRAs), they failed to provide insurance companies with the Notice to Users of Consumer Reports required by the Fair Credit Reporting Act (FCRA).

“Consumer reporting companies sell information that can play a critical role in the price consumers pay for a variety of products and services – or even whether they’re eligible for them,” said Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection. “These cases make clear that all consumer reporting companies must comply with the laws that protect consumers’ rights.”

The proposed respondents, Ingenix, Inc. and Milliman, Inc., provide individual medical profiles, including prescription drug purchase histories of insurance policy applicants, to insurance companies that use them in making underwriting decisions. With applicants’ consent, Ingenix and Milliman obtain five-year prescription drug histories from Pharmacy Benefit Mangers and create prescription medical profiles. Based on their analysis of the information, they report potential medical conditions that may be present.

According to the Commission, the medical profiles are consumer reports because they include information that bears on an individual’s personal characteristics and are used to determine their eligibility for insurance. Ingenix and Milliman are CRAs because they assemble and evaluate consumer report information for the purpose of furnishing it to third parties.

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Consumer Reporting Agency TALX Corp. Agrees to Settle FTC Charges

On July 9, 2009, the TALX Corporation, a subsidiary of Equifax Inc., agreed to settle Federal Trade Commission charges that it violated federal law by failing to provide certain disclosures to users of their consumer reports and to entities that provide information for consumer reports. The proposed settlement requires TALX to pay a $350,000 civil penalty and bars future violations.

The proposed settlement requires TALX to provide the required notices to users and furnishers. If TALX provides the notices electronically, it must follow certain specifications to make the notices “clear and prominent.” Specifically, the notices must be unavoidable, of a size and shade and on the screen for a duration sufficient for an ordinary consumer to read and comprehend them, easily printable, and presented on the principal screen or landing page where the disclosure is relevant. These requirements are designed to ensure that the notices will be effective in communicating the information online.

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US Senate Commerce Committee Report Criticizes Insurers’ Use of Ingenix Inc. Database

Senate report criticizes plans’ use of Ingenix database- The findings are similar to what New York’s attorney general found in his investigation, which resulted in insurers promising to create a new system.

An investigation by the U.S. Senate Committee on Commerce, Science and Transportation has found that the same controversial system for setting “usual, customary and reasonable” pay that was criticized in New York also underpaid patients across the rest of the country.

The report, released June 24, 2009, details the way insurers for the last decade have used Ingenix’s information to set out-of-network pay rates.

A lengthy investigation by New York Attorney General Andrew Cuomo and a series of lawsuits against health plans already had outlined the problems with the industry’s use of a database owned and operated by UnitedHealth Group subsidiary Ingenix. The Senate report reiteratedwhat the New York attorney general and the American Medical Association have said before — that the use of the Ingenix database resulted in underpayments to patients and physicians everywhere in the United States. Committee Chair Jay Rockefeller (D, W.Va.) condemned insurers’ use of the Ingenix data.

The report also gave ammunition to critics of the health insurance industry at a time when health plans are trying to have a major role in crafting health system reform. It found that plans using the data also were contributing to it, allowing insurers to feed charges into the database that were skewed downward.

More than 2 million federal employees and military service members were enrolled in plans that used the Ingenix database to set out-of-network pay, potentially reducing reimbursements for out-of-network care.

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FTC on Your Access to Free Credit Reports – Fair Credit Reporting Act (FCRA) & the Fair and Accurate Credit Transactions Act (FACTA)

The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. The FCRA promotes the accuracy and privacy of information in the files of the nation’s consumer reporting companies. The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the FCRA with respect to consumer reporting companies.

A credit report includes information on where you live, how you pay your bills, and whether you’ve been sued or arrested, or have filed for bankruptcy. Nationwide consumer reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home.

Here are the details about your rights under the FCRA and the Fair and Accurate Credit Transactions (FACT) Act, which established the free annual credit report program.

Q: How do I order my free report?

A: The three nationwide consumer reporting companies have set up a central website, a toll-free telephone number, and a mailing address through which you can order your free annual report.

To order, visit annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. The form is on the back of this brochure; or you can print it from
ftc.gov/credit. Do not contact the three nationwide consumer reporting companies individually. They are providing free annual credit reports only through annualcreditreport.com, 1-877-322-8228, and Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

You may order your reports from each of the three nationwide consumer reporting companies at the same time, or you can order your report from each of the companies one at a time. The law allows you to order one free copy of your report from each of the nationwide consumer reporting companies every 12 months.

A Warning About “Imposter” Websites

Only one website is authorized to fill orders for the free annual credit report you are entitled to under law — annualcreditreport.com. Other websites that claim to offer “free credit reports,” “free credit scores,” or “free credit monitoring” are not part of the legally mandated free annual credit report program. In some cases, the “free” product comes with strings attached. For example, some sites sign you up for a supposedly “free” service that converts to one you have to pay for after a trial period. If you don’t cancel during the trial period, you may be unwittingly agreeing to let the company start charging fees to your credit card.

Some “imposter” sites use terms like “free report” in their names; others have URLs that purposely misspell annualcreditreport.com in the hope that you will mistype the name of the official site. Some of these “imposter” sites direct you to other sites that try to sell you something or collect your personal information.

Annualcreditreport.com and the nationwide consumer reporting companies will not send you an email asking for your personal information. If you get an email, see a pop-up ad, or get a phone call from someone claiming to be from annualcreditreport.com or any of the three nationwide consumer reporting companies, do not reply or click on any link in the message. It’s probably a scam. Forward any such email to the FTC at spam@uce.gov.

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Short History of FTC Credit Report Enforcement Actions

A short history of FTC credit report actions from 2000, 2003, and 2004 against Equifax, Experian, TransUnion, Sprint, and AT&T:

Nation’s Big Three Consumer Reporting Agencies Agree To Pay $2.5 Million To Settle FTC Charges of Violating Fair Credit Reporting Act

On January 13, 2000 the three national consumer reporting agencies, Equifax Credit Information Services, Inc., (Equifax), Trans Union LLC (Trans Union), and Experian Information Solutions, Inc. (Experian), have agreed to a total of $2.5 million in payments as part of settlements negotiated by the Federal Trade Commission to resolve charges that they each violated provisions of the Fair Credit Reporting Act (FCRA) by failing to maintain a toll-free telephone number at which personnel are accessible to consumers during normal business hours. According to the FTC’s complaints, Equifax, Trans Union and Experian (collectively, consumer reporting agencies or CRAs) blocked millions of calls from consumers who wanted to discuss the contents and possible errors in their credit reports and kept some of those consumers on hold for unreasonably long periods of time. The proposed settlements with each CRA also would require that it meet specific performance standards to ensure that CRA personnel are accessible to consumers.

The FCRA is designed to promote accuracy, fairness and privacy of information in the files of every consumer reporting agency. To provide consumers the ability to more easily resolve inaccuracies in their credit reports quickly, Congress amended the FCRA — effective Sept. 30, 1997 — to require Experian, Equifax and Trans Union to provide consumers who receive a copy of their credit report with a toll-free telephone number at which personnel are accessible to consumers during normal business hours.

“The reality is that consumers never got the access to the consumer reporting agencies that the law guarantees,” said Jodie Bernstein, Director of the FTC’s Bureau of Consumer Protection. “These cases demonstrate in no uncertain terms that it’s time for Equifax, Experian and Trans Union to pick up the phone and meet their obligations to consumers.” (more…)

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The Fair Credit Reporting Act Was Amended In 1997

PRIVACY, ACCURACY AND FAIRNESS OF SENSITIVE PERSONAL INFORMATION ENHANCED FOR CONSUMERS UNDER AMENDED CREDIT REPORTING STATUTE
Employers, Creditors and Credit Bureaus Have Major New Responsibilities

Beginning September 30, 1997, an employer must get a job applicant’s written permission before obtaining a copy of the applicant’s credit report. Also, for the first time, creditors and others that furnish information to credit reporting agencies — the companies that compile and disseminate credit information — will have new duties under federal law to ensure the accuracy of the information they supply. Credit bureaus will have increased duties as well, especially in the way they handle disputes from consumers about information in their files. These important new consumer protections, contained in amendments to the Fair Credit Reporting Act, were highlighted today at a press conference hosted by the Federal Trade Commission. The amendments, passed by Congress last year and effective Sept. 30, were designed to better ensure the accuracy and privacy of the information contained in consumer or credit reports. Attending today’s press conference were Senator Richard Bryan (D-NV); representatives from the Board of Governors of the Federal Reserve System; the Associated Credit Bureaus; VISA; MasterCard; and Consumers Union. The bill to amend the FCRA was authored by Senator Bryan and Senator Christopher Bond (R-MO).

“Tuesday will be a big day for consumers as they gain important new powers to fix errors found on their credit reports,” Senator Richard Bryan said. “Any consumer who has gone through the process of getting errors on their reports fixed, knows how helpful these new rights will be. Finally, the burden of proof will be on the credit reporting agency, not the consumer, when mistakes are found on credit reports.”

“This new law is long overdue,” said Senator Christopher Bond. “I have met with many constituents over the years who have told horror stories of trying to fix mistakes on their credit reports. They have met with many of the same obstacles that millions of other consumers have faced — months of waiting for their credit reports to be fixed, credit card companies who are unresponsive, and no one to talk to who will listen to their complaints. This legislation will make it easier for consumers to fight inaccurate credit information, and simply to get information about their credit history.”
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Credit Bureaus Announce How Consumers Can Access Free Credit Reports

On November 23, 2004, the three nationwide consumer reporting companies – Equifax, Experian, and TransUnion – announced the Web address, toll-free telephone number, and postal address consumers can use to request a free annual credit report. Beginning December 1, 2004, consumers in 13 Western states will be able to begin making requests by visiting www.annualcreditreport.com, calling 877-322-8228, or mailing a standardized form to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. The 13 eligible states are Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.
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