NYAPRS Note: The first-ever enforcement of Timothy’s Law sends a strong message to health insurers over the provision of mental health coverage in New York. We’re very grateful to the NY Department of Financial Services for their strong action here.
By Bob Graham IFAnews.com May 8, 2012
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.
Timothy’s Law Fines Total $2.7M
Officials Say 15 Insurers Didn’t Give Notice About Mental Health Coverage
By Rick Karlin May 8, 2012
ALBANY – Fifteen health insurance providers statewide have been fined a total of $2.7 million for failing to properly notify small business owners of their rights under Timothy’s Law.
Named for Timothy O’Clair, a 12-year-old Schenectady County boy who killed himself in 2001 after his family exhausted coverage options for his mental health disorders, the law mandates that insurers offer the same coverage for mental illnesses as for physical ailments.
As it was being developed, small business owners argued that the 2007 measure would be too costly. As a result, companies with 50 employees or less were exempted from the mandate.
However, these small employers can opt to buy mental health coverage for an extra fee and insurance companies have to make it available to them.
All of the affected insurance companies offered the coverage to small employers, but they had failed to properly notify customers that such coverage was available.
“Mental illness can have devastating consequences for families. It’s essential that people understand that insurance benefits are available for treating mental illnesses and that businesses know this option is available,” Department of Financial Services SuperintendentBen Lawsky said in announcing the fines, which are for violations in 2009 and 2010.
Insurance companies said they have since rectified the problem.
“We are very pleased that the Department of Financial Services has taken our concerns seriously,” said Shelly Nortz, of the Timothy’s Law Campaign.
The largest fine went to Oxford Health Insurance for $969,200. Oxford operates primarily downstate. A related Oxford firm was fined $323,640.
In the Capital Region, Empire Health, MVP and HealthNow (Blue Shield of Northeastern New York) were among those fined. “Once we discovered there was a communication issue, we fixed it,” said MVP Health Care spokesman Michael Traphagan.
“HealthNow provides the option for a variety of mental health benefits to our employer groups. However, the requirement and process of written notification to our small groups as required by the amendment to Timothy’s Law was not followed for a short period of time,” HealthNow spokeswoman Julie Snyder said in a statement.
“In this instance, written notification of the option to purchase expanded coverage for small groups is in place and we remain compliant with all aspects of Timothy’s Law,” she added.
Leslie Moran, spokeswoman for the state Health Plan Association, said the companies had notified customers of the mental health option through emails or online, through brokers, but were supposed to send letters as well. They have since started doing that.
“From our perspective, these fines seem disproportionately large,” Moran said.
She added that when Timothy’s Law first passed, there was a state subsidy to help small employers purchase the mental health coverage, but that has been phased out due to budget shortfalls.