Consumer Protection in Private Health Insurance: The Role of Consumer Complaints. B. Jurisdiction and Liaison with Health Plans


Oversight of Grievance Processes of Insurance Plans

The Draft White Paper is totally silent as to whether state insurance departments should have any role with regard to requiring plans to:

  1. Submit internal complaints or grievance data;
  2. Maintain internal complaints logs; and
  3. Submit details of their internal complaints management process.


The survey of all state insurance departments conducted by the NAIC in 1998 found that in two-thirds of the responding states "less than 3% of complaints result in enforcement actions" and only three states reported that more than 10% of complaints resulted in enforcement actions. Interestingly, in discussing the link between complaints and enforcement, the NAIC suggested that complaints are "increasingly used by states to identify problem companies for purposes of market conducts exams and other oversight" rather than serving as the basis for individual enforcement actions.

The NAIC suggests that, in some situations, there are advantages to a "less legalistic approach to complaint resolution" using informal dispute resolution instead of enforcement including:

  1. Reduced time and cost of an informal approach; and
  2. Encouraging companies "to do the right thing" may be easier when advocacy is distinguished from enforcement and is sensible when there is no clear legal violation, but practices are "outside industry norms or otherwise not fair to the consumer".

However the NAIC also notes that enforcement actions may be required for "willful violations of an unambiguous law or recurrent violations of the same law". An example cited from Oregon concerned two HMOs which were fined for failing to conduct reasonable investigations prior to denying emergency room claims "despite the companies' argument that they routinely reversed initial decisions on appeal".