Pa. Department Fines HealthGuard for Pricing Violations

Pennsylvania Deputy Insurance Commissioner Randy Rohrbaugh announced this week that HealthGuard of Lancaster Inc. has signed a consent order and will cease and desist its reported illegal pricing of health insurance policies. The Department imposed a record penalty of $1.6 million against the company and ordered restitution in excess of $195,000.

“HealthGuard has abused the flex rating system, misled consumers and disregarded our orders on prior violations,” Rohrbaugh said. “This is the largest penalty we have ever levied against a health insurer, and we strongly believe that a significant fine was warranted for these pricing violations.”

The Insurance Department cited HealthGuard for overcharging and undercharging group health policies in violation of Act 159, which provides that health insurers may only charge rates approved by the Department. The Department cited and fined HealthGuard for similar violations in 1998 and 2003. In 2004, the Department ordered HealthGuard to perform a compliance audit. During the investigation, HealthGuard identified that 1,029 groups were undercharged and 556 overcharged.

HealthGuard, a wholly owned subsidiary of Highmark Inc., operates as a health maintenance organization, primarily in the Lancaster area. The plan has 57,000 enrollees. Earlier in August, the company announced its intention to withdraw from the marketplace.