The health insurer was fined $1 million, and a spokesman says it corrected the problem.

The New York State Department of Financial Services has fined Excellus Health Plan over claims the company illegally denied consumers contraceptive coverage.

Financial Services Superintendent Maria T. Vullo announced Monday that Excellus Health Plans Inc. was fined $1 million by the Department of Financial Services (DFS) for violations of New York Insurance Law. Excellus wrongly denied contraceptive coverage due to internal system and process errors, failed to promptly pay or deny claims, and failed to acknowledge or resolve consumer grievances within time frames required by law, according to a DFS investigation.

Under New York law, health plans are required to provide coverage for all contraceptive drugs and devices. All non-grandfathered health plans must cover at least one form of contraception in each of the FDA-approved contraceptive delivery methods without co-pays, coinsurance or deductibles.

DFS recently issued a report describing an undercover sting investigation that discovered that certain New York health insurers are providing consumers with incorrect information about contraceptive coverage. DFS also issued a circular letter, which was announced by Gov. Andrew Cuomo on January 21, ensuring that all New York health insurers are providing full contraceptive coverage as required by law.

"DFS is taking this action to ensure that women receive the reproductive healthcare benefits they are entitled to under New York law,” stated Financial Services Superintendent Maria T. Vullo. “Health insurers cannot deny New Yorkers of their state-mandated contraceptive coverage for any reason."

According to a market conduct examination by DFS, between 2008 and 2013, Excellus denied 1,000 claims for contraceptive coverage due to an error in coding. The DFS investigation also found that Excellus did not make prompt payment of certain healthcare claims, payment of interest on some claims and failed to deny some claims on a timely basis. The state claims that Excellus also failed to acknowledge grievances by 482 of those it insured within 15 business days, and also failed to resolve 339 grievances within the 30-day period mandated by New York Insurance Law.

Under the consent order, Excellus has agreed to take all steps necessary to correct all violations and to comply with New York State Insurance Law and Regulations in the future, according to DFS.

"The steps taken today by the Department of Financial Services make good on our promise to women across the state and send a clear message that all insurance companies who attempt to deny or inhibit access to women’s health care will be held accountable,” Cuomo stated.

“The key findings in the report relate to items from a few years ago,” stated Jim Redmond, Excellus regional vice president, communications and community investment. “Those issues were addressed when we completed a major transformation project, which consolidated several computer platforms down to one. The changes we made have brought about significant improvements to our claims payment system.”

A copy of the consent order between Excellus and DFS can be found at 

http://www.dfs.ny.gov/about/ea/ea170417.pdf.