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The Collaborative Clearinghouse for Lawsuits and Other Claims Against ACE Group Insurance Companies

Indemnity and ACE American Reprimanded by Texas Workers Compensation Commissioner

March 2, 2011 The Texas Commissioner of Workers’ Compensation recently levied $116,000 in administrative penalties against two ACE Group subsidiaries.  These actions relate to at least 24 statutory violations by Philadelphia-based Indemnity Insurance Co. and ACE American Insurance Co.

A $68,000 fine was levied against Indemnity for, among other violations, failure to pay legal fees in a timely matter that were tied to claims activities. In one documented example, Indemnity waited more than three years before it complied with a state order that it pay a legal fee.

Regulators found that, in at least four instances in 2010, Indemnity failed to pay for medical services even though it had preauthorized them. The bills ranged in size from just $73 to $7,500. In the latter case, Indemnity pre-authorized medical services to a claimant on April 23, 2010. But it rejected payment on the bill on June 16, 2010, saying that “adjustor disputes charges as medically necessity (sic) and reasonable 100%.”

Indemnity was also faulted for failing to make timely payments on temporary income benefits.  In the case of one employee at a covered firm, it was 34 days late in issuing its first payment. It subsequently was late on making five other payments.

In its official order, the Commissioner’s office also cited Indemnity for failing to process medical bills in a timely fashion, failing to properly respond to a request for reconsideration of a denied claim, and failure to pay medical bills in accordance with the Division’s medical fee guidelines.

Another ACE Group subsidiary, ACE American Insurance Company, appears to have used similar claims settlement practices of improperly delaying and denying payments for Worker’s Compensation claims in the past year.

Authorities first cited ACE American for failure to obey Commissioner Rod Bourdelon’s order that it pay advance income benefits to a claimant. It also found that on March 23, 2010, the insurer denied a bill from a health care provider even though it had previously pre-authorized services that were provided to an injured employee.

In other actions against ACE American Insurance Company covered by the order, the state said:

  • There were three instances, in 2009 and 2010, when ACE American failed to timely pay temporary income benefits to injured employees who were properly due them. In one case, the department said that the company waited 172 days before issuing a payment.
  • ACE failed to timely respond to a request for reconsideration within 21 days after receiving a medical bill for a covered, injured employee. While ACE was due to respond to the reconsideration petition by Feb 8, 2010, it did not actually issue a payment until July 13 of that year, some 155 days late.
  • ACE improperly denied medical services that had been approved by an Independent Review Organization (IRO) for an injured employee. On December 10, 2009, Independent Resolutions Inc., an IRO, approved 80 hours of a chronic pain management program for an injured employee. A health care company provided the necessary services in January 2010, and billed ACE. But ACE rejected the bill, stating, “service is denied for lack of proof (of) pre-authorization.”

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