Maine SC upholds insurance rate reduction

AUGUSTA, Maine (Legal Newsline) - The Maine Supreme Court, in a ruling last week, upheld the state superintendent of insurance's decision to reduce a proposed health insurance rate hike.

The increase was proposed by Anthem Health Plans of Maine Inc.

In a 12-page ruling filed Thursday, the Court dismissed the company's appeal as moot.

The Court wrote, "Because (1) the year in which the challenged rates were effective has passed, and new rates have gone into effect, (2) a favorable decision on the merits could not provide Anthem with any effective financial relief, and (3) both federal and state laws are in transition, we determine that the controversy has lost its vitality and that there exists no basis for the Court to address Anthem's appeal from the decision entered in the Business and Consumer Docket."

The superintendent of insurance had determined that Anthem's proposed average rate increase of 18.5 percent applicable to its individual health insurance products, which contained a built-in projected profit and risk margin of 3 percent, was excessive and discriminatory.

The superintendent indicated that an average 10.9 percent rate increase containing a 0 percent projected profit margin would be approved.

Anthem argued that, in setting a profit margin at 0 percent, the superintendent's decision eliminated its opportunity to earn a "not... inadequate" or fair and reasonable rate of return.

The company filed a petition for review, requesting that the superintendent's decision be vacated and the case remanded for approval of a rate that would include a 3 percent profit margin.

The case was transferred to the Business and Consumer Docket, and the court found no constitutional or statutory infirmity and affirmed the superintendent's decision. Anthem then filed its appeal with the state's high court.

"Even if we were to find in Anthem's favor and vacate the Superintendent's decision, Anthem has no legal authority to retroactively collect any such increases from policyholders," the Court wrote.

Consumer Watchdog, which claims to be the nation's most aggressive consumer advocate, says the victory for Maine consumers showed the need for effective rate regulation in every state to ensure that health insurers charge fair prices, especially under the new federal health care reform.

"State regulators' close look at the numbers behind Anthem's proposed rate hike in Maine revealed an excessive increase that could not be justified," Carmen Balber, Washington director for Consumer Watchdog, said in a statement Tuesday.

"Consumers everywhere deserve the same level of scrutiny for skyrocketing insurance premiums. Without strong rate regulation, insurance will be priced out of reach for the average American and health reform will fail in its goal of expanding access to care."

From Legal Newsline: Reach Jessica Karmasek by e-mail at jessica@legalnewsline.com.