December 12, 2024

OLYMPIA, Wash. — Washington state Insurance Commissioner Mike Kreidler issued fines totaling $576,500 against insurance companies, agents, brokers and unlicensed entities in October and November of 2024 for violations of state insurance laws and regulations.  

This included $100,000 levied against PacificSource Health Plans for incorrectly processing claims; $130,000 in fines against Delta Dental and its health care benefits manager, Wyssta; and a $100,000 fine against Lemonade Insurance Company. 

PacificSource fined $100,000 

Kreidler’s office fined PacificSource Health Plans $100,000 for incorrectly processing claims, resulting in more than $85,000 in unnecessary co-payments.  

A consumer filed a complaint with the OIC after their claims under a PacificSource plan required co-payments. Before purchasing the policy, the consumer confirmed with their insurance broker that mental health and dietician treatments would be covered without a co-pay or deductible if the providers were in-network and appointments were held virtually. 

PacificSource, however, processed mental health treatments with a $40 co-pay and dietician treatments with an $80 co-pay — even after the consumer had met their deductible. The consumer called the company and filed appeals, all of which upheld the company’s initial denial. 

PacificSource’s medical benefits summary for the plan in question listed no co-pays for the in-network telehealth treatments, but upon further inquiries from the OIC the company claimed “telehealth” included just audio-only visits, rather than audio and video visits. The company, however, did not specify this requirement in either the summary of benefits for its plan or the training materials provided to its brokers. Its policy defined telehealth as including audio-only and audio and video visits. 

PacificSource re-processed the 24 claims from the initial consumer and removed the member cost share. Upon the OIC’s request, the company identified 733 other people in similar situations who were charged a total of $85,885.23 (plus interest) in cost-shares. PacificSource re-processed those claims to remove the co-payment. 

Lemonade fined $100,000 

Kreidler’s office fined Lemonade Insurance Company $100,000 for using an incorrect base loss cost on property policies.  

The incorrect rate was initially noticed by the Washington Insurance Examining Bureau, which notified Lemonade. Lemonade then self-reported the issue — which impacted policies between January and April of 2022 — to the OIC.  

 Of the impacted policyholders, 43,094 were refunded a total of $415,589, which included refunds and interest. Refunds ranged from 1 cent to $319, with an average of $9.64.

Delta Dental of Washington and Wyssta fined a combined $130,000 

Kreidler’s office fined Delta Dental of Washington and Wyssta, its health care benefit manager (HCBM), a combined $130,000 for violations of state insurance laws. This included denying claims based on terms that hadn’t been filed and approved with the OIC, as required by the insurance code. 

Wyssta took over managing Delta Dental’s enrollment, invoicing, payment, and claims administration on January 1, 2022. This transition sparked an increase in complaints about notices and claims from the company filed with the OIC. 

The OIC conducted a review of Delta Dental in 2023, which revealed violations related to notice and disclosure requirements, policy misrepresentations, and claim denials. 

Delta Dental is required by law to post its contracted HCBMs, and the services each one provides, on its website. Despite being aware of these requirements, which went into effect on January 1, 2022, the company’s first public notice was delayed by five months and the search functionality for its website notice was delayed by 535 days. 

The company’s evidence of coverage documentation from 2022 didn’t include the required HCBM language. 

An OIC review of consumer complaints showed Delta Dental and Wyssta inappropriately denied claims based on time and frequency limits that weren’t filed with and approved by the OIC. 

A review of Delta Dental’s processed claims from January 1, 2022, to January 31, 2023, showed 23 claims had limits applied that weren’t documented in the plan contract; 17 people were affected by these unapproved limits. Seven separate service types had denials and processing limits that weren’t disclosed to consumers in their plan documents, which included 50 separate billing codes for which unpublished limits were applied. 

Wyssta finished updating its claims processing systems in April of 2023 to correct the issues.

Other fines 

Kaiser Foundation Health Plan of Washington & Kaiser Foundation Health Plan of Washington Options, Renton, Wash.; fined $50,000 (order 24-0224). 

• Kaiser incorrectly denied mental health visits and incorrectly applied out-of-network benefits for services received in-network. The company updated its system to correct the error and reprocessed 57 claims, which showed $1,497.82 in underpayments. The OIC discovered Kaiser’s violations after the Squaxin Indian Tribe filed a complaint with a list of submitted claims that were denied payment.   

Asuris Northwest Health, Bridgespan Health Company, Regence BlueCross BlueShield of Oregon, Regence BlueShield, Regence BlueShield of Idaho; fined $50,000 (order 24-0227). 

• The companies contracted with an unlicensed health care benefit manager (Frederick Ey), who reviewed 253 cases on the companies’ behalf before obtaining authorization to do so in Washington. 

Frederick Ey, MD, Cave Creek, Ariz.; fined $10,000 (order 24-0226). 

• Ey provided health care benefit manager services by reviewing 253 cases in Washington without first registering with the OIC. 

Laurie Gunsolley, Chehalis, Wash.; fined $20,000 (order 24-0200). 

• Gunsolley conducted insurance business under names other than the licensed producer’s legal name, and without registering those names or notifying the OIC.  

Capital Claims Management, LLC, Costa Mesa, Calif.; fined $20,000 (order 24-0243). 

• The company employed unlicensed and unaffiliated individuals to act as adjusters on its behalf and failed to verify adjuster license requirements in Washington. 

Amy Drewel & Mosaic Insurance Alliance, LLC, Lynnwood, Wash.; fined $15,000 (order 24-0253). 

• The producer and agency used and instructed other agency employees to use a former employee’s login credentials to solicit and sell insurance. 

Continental General Insurance Company, Austin, Texas; fined $8,000 (order 24-0229). 

• The company used an unregistered health care benefits manager. 

Vet24seven, Inc., San Marcos, Calif.; fined $5,000 (order 24-0235). 

• The company solicited and sold insurance in Washington without registering with the OIC. 

SkyGen USA, LLC, Menomonee Falls, Wis.; fined $3,000 (order 24-0251). 

• The company, a health care benefit manager, failed to timely report an administrative action taken against it by the New York Department of Financial Services. 

Network Medical Review Company, LLC, Springfield, Ill.; fined $1,500 (order 24-0231). 

• The company failed to provide timely notice of a material change to the OIC. 

Diamond State Insurance Company, Indianapolis, Ind.; fined $15,000 (order 24-0240). 

• The company applied incorrect rates and rules to policies that rejected terrorism coverage and received fire following coverage. 

The Carter Center, Inc., Atlanta, Ga.; fined $20,000 (order 24-0241). 

• The company issued seven charitable gift annuities to Washington residents, including two that didn’t meet state requirements, before being granted a certificate of exemption by the OIC.  

The University of Minnesota Foundation, Minneapolis, Minn.; fined $10,000 (order 24-0244). 

• The foundation issued three charitable gift annuities to Washington residents, none of which met state requirements, before being granted a certificate of exemption by the OIC.  

Loma Linda University, Loma Linda, Calif.; fined $10,000 (order 24-0246). 

• The university issued charitable gift annuities to Washington residents before being granted a certificate of exemption by the OIC.  

Westmont College, Santa Barbara, Calif.; fined $5,000 (order 24-0234). 

• The college issued a charitable gift annuity to a Washington resident before being granted a certificate of exemption by the OIC.  

Autoguard Advantage Corporation, Dublin, Ohio; fined $4,000 (order 24-0166). 

• The company sold service contracts that weren’t filed with, or approved by, the OIC, and refused to perform services it claimed to cover.

About the office 

Kreidler’s office oversees Washington’s insurance industry to ensure that individuals, companies, agents, and brokers follow state laws designed to protect consumers. Since 2001, Kreidler has assessed more than $42 million in fines, which are directed to the state’s general fund to pay for state services. 

The Office of the Insurance Commissioner publishes disciplinary orders against companies, agents and brokers. Consumers can also look up complaints against insurance companies.  

For an insurance question or complaint, you may contact Kreidler’s consumer advocates online or by phone at 800-562-6900.