MONTGOMERY, Ala. (AP) – Blue Cross Blue Shield of Alabama has been hit with an $8 million penalty for charging rates from 2005 to 2013 that differed from those approved by the Alabama Department of Insurance.
Al.com reports the charges occurred in about 1,400 plans issued to small group employers – those with two to 50 employees – and some COBRA plans for former employees.
Company officials have said the rate variations were tied to a policy that was intended to reduce the shock of large rate increases and resulted in savings for most customers. However, attorneys suing the company for alleged anti-trust violations said the practice violated state laws that require rates to be filed and approved by insurance regulators.
The rate variances resulted in undercharges of almost $107 million and overcharges of almost $33 million, according to the Aug. 16 order by the insurance department, which has been investigating the rate charges since February.
The $8 million assessment was levied because the company failed to inform the department about its methods for raising or reducing rates.