Health insurers fined by NYS for improper religious exemptions

May 8, 2019

New York State has fined 10 health insurers, including two of the largest in Western New York, $509,000 for violations related to contraception coverage.

The State Department of Financial Services says it found HealthNow - the parent company of Blue Cross/Blue Shield - Independent Health, Oxford, Aetna, Crystal Run, CDPHP and affiliates improperly exempted employers from providing contraceptive coverage.

“New York’s health insurers are on notice that DFS will take all actions necessary to protect healthcare consumers from insurers that fail to adhere to New York State’s statutory and regulatory requirements, including for contraceptive coverage,” said Acting Superintendent Linda Lacewell. “Today’s guidance also serves as a strong reminder to New York-regulated insurers that recent federal rules regarding exemptions on the basis of religious beliefs do not preempt robust consumer protections provided by state law.”

DFS said its investigation found the insurers improperly granted religious employer exemption requests to more than 30 entities that did not actually meet the requirements in 2016-2017.  

Lacewell said Oxford granted the most exemptions, including to "a wood floor refinisher, a café, a chimney cleaning service, a gastroenterologist, a tax consultant and a construction company."

HealthNow reached out to WBFO with a statement saying it "cooperated fully" with the state's inquiry and notified impacted members, and that its "internal review process has been updated to ensure future compliance."

"The issues identified by DFS relate to an internal review process that inadvertently approved requests from five (5) employer groups for a Religious Exemption....This time period included changes in DFS rules....Employees at these insured groups still had access to contraceptive coverage at no additional cost per New York State’s mandate."

The state required health insurers to take corrective actions, including contacting and reimbursing all members who were denied coverage and had to pay out-of-pocket for contraception.

The ruling noted the narrow religious exemption allowed and that an insurer cannot rely on self-certification without verifying it. It also advised religious employers opting out of contraceptive coverage to provide written notice to employees prior to enrollment in a health insurance plan.

Copies of the consent orders signed between DFS and the insurers can be found here. A copy of the guidance issued by DFS can be found here.