Cox sues insurer, state office

Keith Loria Sep. 20, 2010, 11:42am


LANSING, Mich. (Legal Newsline) - Michigan Attorney General Mike Cox announced on Friday that he has filed a lawsuit against Blue Cross Blue Shield of Michigan and the state's Office of Financial and Insurance Regulation.

The lawsuit alleges illegally raised rates for seniors who purchase Medigap. He says that by approving the rate increase without providing notice, OFIR violated the Nonprofit Health Care Corporation Reform Act, because his office and others were denied the chance to request a hearing as provided by state law.

Cox is seeking a temporary restraining order to stop the implementation of the increase until a hearing for a preliminary injunction can be held. Cox believes that an immediate implementation of the proposed increase will cause seniors to drop their coverage, putting their physical and financial health at risk. Medigap is a popular Medicare supplemental insurance and many seniors rely on it.

"It is absolutely stunning that the state agency created to protect consumers completely ignored the law created to ensure Michigan seniors are protected," Cox said.

BCBSM filed a new Medigap rate plan with OFIR on Aug. 6 to raise rates on subscribers who receive any subsidy from their former employers to purchase Medigap insurance and on out-of-state subscribers by $70.84 per month, a 66 percent increase.

BCBSM has also proposed raising rates on other Medigap subscribers by 12.5 percent, which would affect nearly 8,600 subscribers, Cox says.

OFIR issued a letter approving the rate increases on Sept. 7, but never published notice of the proposed rate increase within scheduled time frames, which Cox alleges is a violation of state law. His office, Cox contends, should be afforded 60 days after notice by OFIR to request such a hearing, and OFIR may not issue a final order until such a hearing.

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