Judge erred in State Farm secrecy case, appeal says

Circuit Judge James C. Hankinson
Circuit Judge James C. Hankinson

A judge in Tallahassee relied “solely on the testimony of State Farm’s own employee” about the value of information the company wants to declare a trade secret and “misapplied” the proper definition under law, Florida regulators argued in an appeal this week.

If it stands, Leon County Circuit Judge James C. Hankinson’s ruling this spring would let State Farm — and potentially every other property insurer in the state — hide information that has been public for years about how many customers it has, or is dropping.

The trial court found only that the data had value to State Farm, but not independent economic value to others as required by law, argued Elenita Gomez and Shaw Stiller, assistant general counsels for the state’s Office of Insurance Regulation.

The court “misstated and misapplied the definition of a trade secret” in Florida Statutes, they wrote in a filing Monday with the First District Court of Appeal.

Attempts to seek comment from State Farm were not successful.

In May, a Florida spokeswoman said State Farm will no longer talk to The Palm Beach Post.

“Thank you for reaching out, but unfortunately due to your consistent approach of continuously writing negatively about State Farm in your news stories, we are no longer responding to your inquiries,” spokeswoman Michal Brower said.

Information about how many customers a company has or has dropped, statewide and in various counties, is available for virtually every Florida property insurer in a public database known as QUASR.

Since 1995, insurers have been required to file this quarterly information with the state and it has been available as public records the entire time, regulators noted.

As The Post reported, State Farm was once Florida’s largest property insurer but dumped about half a million homeowner policies in the past half dozen years in a massive insurance crisis for the state. Insurance advertising often emphasizes themes of trust, such as being a good neighbor, but public access to data can offer another perspective — such as when a company is canceling or not renewing policies.

By 2014, State Farm said it was “re-entering” the market but needed to keep its customer counts in various counties secret so as to avoid tipping off competitors. It declared the information a trade secret. State Farm is the only major insurer not appearing in the state database since that time.

In court documents, the company maintains its “associates spent valuable time and resources to determine how to best re-enter the market and have gone to great expense to develop its plans for identifying and rating risks. Because Florida is a competitive marketplace, many competitor insurers would like to have access to State Farm’s current data contained in the (state) reports, thereby potentially undermining the value of this work to State Farm.”

Yet The Post found the company actually dropped about one in 10 of its remaining customers, or about 40,000, in the year after it announced it was writing new business.

Consumer advocates have struggled to understand the trial court’s ruling.

It is “still hard to understand how information that had routinely been public could transform into a trade secret,” said Birny Birnbaum, executive director of the Center for Economic Justice in Texas. “At best, it shows that demonstration of a trade secret is trivial and the overly broad trade secret exemption to public information laws undermines public accountability.”

MetLIfe, Unum under scrutiny for big rate hikes in hearing today

Bernard Haut
Bernard Haut

Seniors as far away as Wellington say they are planning to attend a hearing today in Miami on proposed rate increases up to 114 percent in long-term care insurance.

Others can watch the hearing that starts at 1 p.m. live on the Internet at The Florida Channel.

Hearings for MetLife and Unum deal with proposed rate increases up to 95 percent and 114 percent respectively.

After hearing testimony from company officials, consumers and others, the state’s Office of Insurance Regulation will issue a decision in coming weeks.

The insurance pays for services like help with bathing, dressing, eating or housework, at home or an assisted-living facility. Such services are not routinely covered under Medicare, and more than 10 million people have purchased policies from the private market. But insurance companies say costs have mushroomed as people live longer and use the services more, forcing them to seek higher rates.

As The Palm Beach reported, seniors like Bernard Haut of Boynton Beach say the rate increase are unfair to people on fixed income: “They are forcing people who probably can’t afford this increase to give it up when they now need it more than ever.”


Hearing on MetLife, Unum

  • Date: Today, Friday, Aug. 12
  • Time: 1 p.m.
  • Place: Kovens Conference Center, Room 1145, Florida International University, Biscayne Bay Campus, 3000 N.E. 151st St., Miami
  • Watch: thefloridachannel.org

MetLife, Unum hikes up to 95% and 114% draw Fla. hearing

Bernard Haut
Bernard Haut

Florida regulators said Wednesday they have scheduled a hearing Aug. 12 on requests by two companies to raise long-term care insurance rates up to 95 percent and 114 percent.

Hearings for MetLife and Unum mark the latest developments in rocketing rates that have distressed seniors like Bernard Haut, 81, of Boynton Beach.

“They are forcing people who probably can’t afford this increase to give it up when they now need it more than ever,” Haut told The Palm Beach Post in May.

The insurance pays for services for people who need help with things like bathing, dressing, eating or housework, at home or an assisted-living facility. Such services are not comprehensively covered under Medicare, and more than 10 million people have purchased policies from the private market. But insurance companies say costs have exploded as people live longer and begin to use the services more.

Metropolitan Life Insurance Co., the largest life insurer in Florida and one of the largest players in long-term care, is proposing an average premium increase from $1,593 to $2,580, the state’s Office of Insurance Regulation said.

MetLife has more than 22,000 long-term care policyholders in Florida, including 1,883 policies in Palm Beach County and more than 2,000 in Broward County, its two largest markets in the state.

Unum Life Insurance Co. of America, the largest provider of disability insurance in the U.S., has more than 45,000 long-term care customers in the state. Its average annual premium would rise from $581 to $862, officials said. It has about 1,500 customers in Palm Beach County.

Regulators have not always been persuaded that the full requested increases were justified in Florida, records show. Since 2010, the cumulative industry average increase granted by Florida regulators among about two dozen companies was 20.6 percent, though companies often asked for much more — as much as 148 percent.

In May, MetLife spokeswoman Judi Mahaney told the Post, “The long-term care insurance industry as a whole is facing challenges as a result of evolving actuarial assumptions on pricing, and MetLife is no exception.”

The company offers ways to “mitigate” the impact of rate increases through options that can include reducing benefits, she said. For customers who cancel because of an increase, policyholders can get reduced benefits up to an amount they have already paid in premiums, Mahaney said.

MetLife had no additional comments this week.

Here is a full statement from Unum:

“Unum determined the prices for its long term care (LTC) business using the best data available at the time and applying assumptions and predictions about how future experience would develop. Unfortunately, like many in the industry, our actual experience in the years or even decades since those policies were issued has turned out to be significantly different than the actuarial assumptions used to set the original premiums. The individuals who are covered under the LTC policies are both living longer and holding on to their policies longer than anticipated, leading to more claims being made. Once on claims, they are also staying on claim longer than expected. At the same time, investment earnings, which are used to support the payment of claims, continue to be significantly lower than projected given the overall, sustained low-interest-rate environment.

“One of the steps we have taken at Unum to decrease the financial risk posed by our long term care block of business is to file for premium rate increases as allowed under our contracts and the law.

“We know how difficult rate increases can be for policyholders. We will continue to provide alternatives to manage affordability for our customers. This may include options to adjust the inflation cap, reduce the benefit period or adjust the daily benefit levels. We also provide the policyholder the ability to take a non-forfeiture option whereby there no longer pay premiums going forward and can receive a benefit equal to the premiums paid for the policy to date.

“We don’t want to see any policyholder lapse their policy as a result of a rate increase and believe we offer reasonable and affordable alternatives.

“We take very seriously our commitment to providing service to our current policyholders – over one million insureds in the U.S. – and have a team of more than 150 professionals dedicated to providing customer service and administering benefits to those people who are currently on claim. We paid over $370 million in benefits during 2015, reflecting both our commitment and the value of these policies to consumers.”


Hearing on MetLife, Unum

  • Date: Friday, Aug.12
  • Time: 1 p.m.
  • Place: Kovens Conference Center, Room 1145, Florida International University, Biscayne Bay Campus, 3000 NE 151st Street, Miami


Aetna-Humana deal gets Florida OK with conditions

aetna signFlorida regulators on Monday approved Aetna’s acquisition of Humana with conditions, including that the combined company — poised to become the state’s largest by premiums — must enter five new counties in the online health marketplace.

Overall, the state’s Office of Insurance Regulation found the combination of two of the state’s top four health insurers by premiums “would not substantially lessen competition in insurance in this state or tend to create a monopoly.”

Other conditions of approval, according to a statement by Florida officials:
* An agreement Aetna will maintain fair treatment of individuals living with HIV.
* A requirement that the financial strength of Aetna’s Florida-based HMOs be increased by requiring compliance with Risk-Based Capital standards.

In a statement, Aetna said it has now secured 10 of 20 state approvals required, but noted it is possible the U.S. Department of Justice’s antitrust review “will require divestiture in some geographies, which is a standard tool as part of its approval process.”

As for approval in the third largest state, Aetna declared itself pleased.

“Florida’s evaluation was based on a thorough review of the competitive environment in the state,” the company said. “We are pleased that in its review, the OIR recognized how traditional Medicare competes with Medicare Advantage plans, and that consumers have robust choice in a competitive landscape.”

With regard to serving more counties, Aetna said, “As we consider our future presence on the exchange, we will look for opportunities to expand into communities where we can give consumers a valuable offering at an affordable cost.”

Aetna and Humana representatives said in a December hearing they expect to save $1.25 billion through their proposed merger by 2018 and their combined expertise will help them serve customers more efficiently. The deal would build on “complementary” strengths in different areas of business, they argued.

Consumers Union and eight other consumer and worker groups disagreed in a comment letter, saying the combination means fewer choices and reduced competition.

“While the merging companies have argued supposed benefits associated with these mergers, available scholarly evidence suggests that consumers will see limited to no benefits and instead will face higher costs, less innovation, and potentially lower quality of care,” the comment letter said.

For example, the combination would control over half of all Medicare Advantage enrollees in Palm Beach and four other counties, plus one of the nation’s highest concentrations of market power for insurers who administer plans for companies who pay their own claims, the groups said.

The state’s approval appears to position the combined company to be the largest in the state by premiums, though numbers in a state report represent a year-old snapshot.

Top Health Insurers in Florida
(Premium for Calendar Year 2014)
1. Guidewell Mutual Holding Group (Florida Blue) $10.8 billion
2. Humana Inc. $10 billion
3. UnitedHealth Group $9.4 billion
4. Aetna Inc. $4 billion
Source: Florida Office of Insurance Regulation



Alert: If you have these two Obamacare plans, change immediately

alertOne day before an extended deadline to secure Jan. 1 health coverage, the Florida Office of Insurance Regulation issued a consumer alert on two companies Wednesday.

Officials reminded consumers Cigna Health and Life Insurance Co. and Preferred Medical Plan Inc. will no longer be providing coverage to policyholders on the Affordable Care Act exchange for plan year 2016.

The insurance office said it “strongly urges consumers who purchased health insurance coverage on the Health Insurance Marketplace (Exchange) in 2015 through either Cigna Health and Life Insurance Co. or Preferred Medical Plan Inc. to take action immediately and select another plan, if they have not already done so, by visiting www.healthcare.gov.”

The deadline has been extended to Thursday to secure coverage effective Jan. 1.

A majority of affected policyholders are located in the South Florida region, officials said, though they did not say how many may still need to take action.

Cigna repeated a statement The Palm Beach Post reported in October, blaming addiction treatment fraud for its decision not to offer marketplace plans in 2016, though the company hopes to resume in 2017. An estimated 30,000 customers were affected, the newspaper reported at the time.

Preferred, based in Coral Gables, said a maximum of 77,000 customers are affected. A company statement cited problems in the federal government’s “risk corridor” plan, where Congress blocked certain sources of funding for the program intended to help insurers cover unexpected losses.