In a wide ranging re-evaluation of disability claims covering its insureds in California, Connecticut, Maine, Massachusetts and Pennsylvania, Cigna Corporation may pay up to $77 million in past disability income insurance claims.  According to a statement by Cigna yesterday, "We are voluntarily agreeing to review an isolated subset of past long-term disability claims files from 2009 and 2010 (also from 2008 in California only) under updated standards," (Law360, subs. req.).

In 2009, a market conduct action was initiated alleging certain Cigna companies may have violated federal and state insurance trade practices laws.  Cigna came up with a plan to resolve any disputes, and the parties -- which included the insurance departments of all five states listed above -- agreed to settle the market conduct action.  As part of its statement yesterday, Cigna clarified that the "regulatory settlement agreement grew out of a normal cycle of review by state regulators." 

As part of the remediation plan, Cigna agreed to:

  1. Establish an internal disability claim quality assessment team;
  2. Report on the reassessed claims involved in the remediation plan to all five insurance departments for a period of two years;
  3. Compensate the five states for costs incurred in the monitoring process;
  4. Revise its policies to ensure compliance with Social Security Disability Income benefits laws, the selection of evaluation personnel, and the gathering of medical information; and
  5. Pay certain fines and administrative fees to the departments.