Agency penalizes Humana $500,000
Company accused of selling unwanted Medicare policies to older Oklahomans
Agency penalizes Humana $500,000

By Jim Stafford

Published: August 23, 2007

Humana Insurance Co., called out by Oklahoma Insurance Commissioner Kim Holland last spring for using unlicensed agents to sell Oklahomans Medicare Advantage plans, has paid a $500,000 fine for its transgressions, Holland said Wednesday.

In May, Holland alleged that unlicensed Humana agents preyed on older Oklahomans, selling them unwanted Medicare policies that in some cases displaced Medicare coverage they had held for years.

She then took her case to Washington, testifying before Congress twice this summer and documenting the sales tactics used to sell Medicare Advantage and prescription drug plans to Oklahoma seniors.

"We license insurance agents to make sure they are trustworthy, educated and tested,” Holland said. "Insurance companies may only accept business from agents who have achieved those standards of professionalism. Oklahoma seniors have the right to expect an insurance company and its agents to follow the law.”

Humana did not contest the allegations and agreed to the amount of the fine. But a Humana spokesman on Wednesday said the state's entire case was built around sales of 123 policies out of more than 25,000 sold by the company during the time period involved.

"First off, all 68 agents that were in question here were actually licensed,” said spokesman Jeff Blunt from Cincinnati. "This whole thing was a border issue, really, in which Oklahomans living near the state lines traveled across state lines or called agents in other states to purchase their plans. So the agents in question were licensed in the states where the plans were sold, but not in Oklahoma, and therein lies the issue.”

It doesn't matter that they were licensed in Kansas or Arkansas or Texas or whichever state from where they sold the policies, Holland said. They weren't licensed by Oklahoma, she said.

Holland has campaigned for the federal government to give states more regulatory authority over Medicare health insurers to ensure sales agents meet state requirements and to eliminate misleading sales tactics.

"That's really the crux of the issue here,” Holland said. "That the federal government preempted our normal authority over insurance companies that sell these products. For any other product, our responsibility is to monitor and provide regulatory oversight to all of their activities.

"The federal government came in and said on Medicare Advantage plans and Part D, we are going to strip you of that authority.”

After Holland filed a complaint against Humana for its violations and testified in Washington, seven major insurers voluntarily suspended sales of Medicare Advantage plans until they could meet certain criteria set by the Centers for Medicare and Medicaid Services.

Humana's Blunt said the company has almost completed the process and plans to begin marketing the plans again in Oklahoma and elsewhere. It has what he called a "zero tolerance” for errors, despite the 123 instances cited by Holland.

"It's perhaps worth noting that we have filed with CMS to offer a wide range of plans for next year,” Blunt said. "Currently, we have 50,000 members in Oklahoma.”

Holland said Humana was not singled out for its sales tactics while other violators went unpunished.

"We singled them out only to the extent that we received a higher number of complaints against them than anybody else,” she said.

"We license

insurance agents to make sure they are trustworthy,

educated and tested.”

Kim Holland

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