NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman announced a $3 million settlement on Wednesday with Excellus Bluecross Blueshield to resolve allegations that it wrongly denied the claims of its members.

Excellus allegedly improperly handled accounting for deductibles and forced plan members to overpay. Under the terms of the settlement, Excellus will pay approximately $3.1 million to consumers and providers and properly account for members' deductibles and out-of-pocket expenses in the future to prevent future improper denials of claims.

Excellus also entered into a stipulated agreement with the state's Department of Financial Service related to the same matter.

"An insurance policy is a two-way street," Schneiderman said. "New Yorkers who live up to their end of the bargain by paying their premiums and deductibles deserve to have their insurance company live up to its promises by properly paying their claims. My office will continue to look out for New Yorkers who face improperly denied health insurance claims and ensure that they are repaid the money they are owed. We are pleased that Excellus Bluecross Blueshield has refunded money to thousands of New Yorkers."

Excellus allegedly failed to properly track the deductible and out-of-pocket expenditures into its automated claims system and failed to pay customers' claims even after required deductibles were met. Providers or customers were then billed for the cost of the services after the claims were denied.

The company reported that the accounting errors were the result of a technology glitch after modifying its software. The computer errors affected 12,000 customers, erroneously denying the customers for failure to satisfy a deductible that had already been met. The errors primarily affected members covered under high-deductible plans.

Excellus said that the faulty claims system is now working properly and that the company has paid approximately $700,000 to customers who were owed less than $250 and $2.4 million to customers owed more than $250.

Under the terms of the agreement, Excellus will conduct outreach and make sure that all members who overpaid providers because of the accounting error receive restitution. The company will also audit and monitor its claims processing procedures in the future to avoid future issues.

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