Press Release 2000-11 Arizona Insurance Department Fines Aetna U.S. Healthcare for Violations of Health Care Appeals Law


Arizona Department of Insurance
100 North 15th Avenue, Suite 261

Phoenix, AZ  85007-2630

Starting July 1, 2020, we became the
Department of Insurance and Financial Institutions (DIFI).

Media Contact: Don Harris, Public Information Officer, (602) 912-8402

2000-11 For Immediate Release June 27, 2000

The Arizona Department of Insurance has found that Aetna U.S. Healthcare, Inc., violated numerous elements of the state’s Health Care Appeals law and has fined the HMO $10,000.

The Department of Insurance is auditing a number of health insurers to assess compliance with the health care appeals laws, which first went into effect in 1998. The settlement with Aetna U.S. Healthcare is the first resolution of such an audit. Aetna U.S. Healthcare agreed with the findings and terms of a consent order that was issued by Arizona Insurance Director Charles R. Cohen, on June 26. In addition to the fine, the company agreed to correct their procedures and reopen some appeals.

At the time that health insurance policies are issued or renewed, health insurers are required to provide consumers with information packages describing the appeals process. To start the process, the consumer must appeal directly to his or her insurance company. The appeals law requires four levels of review:

  • Expedited Medical Review for urgent medical cases, to be completed within one business day.
  • Informal Reconsideration for non-urgent medical cases, to be completed within 30 days.
  • Formal Appeal, to be completed within 30days of the request for a review, or 60 days in cases of denied claims for services already received.
  • External Independent Review, generally completed within 30 days, but with no statutory time limit.

“We are in the process of conducting audits of other health insurers to determine whether they are complying with the law that created the Health Care Appeals program,” Cohen said. “This is an important consumer-protection law, and the public must have confidence that health insurers are living up to their legal obligations.”

Cohen said Insurance Department examiners found a broad range of violations by Aetna U.S. Healthcare in virtually every aspect of the program. For example:

  • Of 158 informal reconsideration appeals audited, 151 contained at least one deficiency.
  • Of 15 formal appeals, 13 contained at least one deficiency.
  • All three external independent reviews contained deficiencies.

In addition, examiners found problems with the Aetna U.S. Healthcare Complaint, Grievance and Appeal Resolution Procedures Manual and its health care appeals information packet given to enrollees.

  • Many of the violations involved Aetna’s failure to properly notify the member, provider or the Insurance Department of pending appeals. Aetna also failed to meet prescribed deadlines for handling appeals.
  • After Aetna upheld its own denial of appeals in four cases, the insurer failed to properly notify those members that they had the right to request an external independent review.
  • Aetna failed to include the criteria and clinical reasons for its decisions in all formal appeal decision letters to members.
  • All expedited medical reviews were not completed within the required one business day of receiving the request and a physician’s certification.

The Aetna U.S. Healthcare audit covered the period from July 1, 1998, to Aug. 31, 1999.

“Because this is a relatively new law, we are not surprised to find less than perfect compliance,” Cohen said. “That’s why we are doing these audits. Our objective at this point is to assess the level of compliance throughout the industry, identify problem companies and areas, and be proactive about bringing health insurers into full compliance.”

The Insurance Department conducted a training session and seminar for the industry last September to apprise health insurers of their obligations under the law and to answer their questions. Approximately 70 representatives of health insurers, including all of the HMOs active in Arizona, attended.

From July 1, 1998, to June 21, 2000, health insurers received a total of 455 appeals that were subject to the External Independent Review process, with 164 of those involving determinations of medical necessity referred directly by insurers to external medical reviewers. Of the 164 appeals, 96 were upheld in favor of insurers, 51 were overturned in favor of consumers, seven were partially overturned, three were overturned by insurers before external reviewers reached decisions, and seven are pending.

The remaining 291 cases were submitted to the Insurance Department for review regarding questions of coverage. In 79 of those cases the Insurance Department referred the appeals to external independent medical reviewers. Of the 79 appeals, 39 were upheld, 35 were overturned, one was partially overturned, two were overturned by insurers before external reviewers reached decisions, and two are pending.

Of the 212 cases at the Insurance Department reviewed regarding coverage, 149 were upheld, 37 were overturned in favor of consumers, six were partially overturned, five were overturned by insurers, two are pending, and 13 were withdrawn because they did not meet the statutory definition of an appealable issue.


Insurers Offering Individual Health Insurance in Arizona

Lists insurance companies that are offering health insurance to individuals and families in Arizona in 2020.  Open enrollment starts November 1st and now runs through December 17th, 2019.  Individuals can start shopping for coverage now at or (Spanish)

Notice of Proposed Rulemaking - Corporate Governance Annual Disclosure Model Regulation In 2019, the Arizona Legislature adopted the NAIC Corporate Governance Annual Disclosure Model Act at Arizona Revised Statutes (“ARS”) by enacting the Corporate Governance Act at Title 20, Chapter 2, Article 16 (Laws 2019, 1st Reg. Sess., Ch. 180, § 1).   The Department of Insurance (“Department”) seeks to adopt the correlate Corporate Governance Annual Disclosure Model Regulation.  ARS § 20-492.02 allows the Department to adopt rules to carry out the Act upon notice and an opportunity to be heard.  The Legislature has exempted the Department from Title 41, Chapter 6 for one year after the effective date of the Act.  (Laws 2019, 1st Reg. Sess., Ch. 180, § 2.)
Arizona's Surprise Bill Resolution Report for 2019

As shown in the attached report prepared pursuant to A.R.S. § 20-3118(A), the Department of Insurance received 91 requests for dispute resolution in Calendar Year 2019.  Of those, 53 have been resolved or closed, and health plan enrollees saved $41,538 by submitting their surprise bills for resolution.  

Not all health care bills qualify for the surprise bill resolution process.  The Department's Suprise Out-of-network Billing Dispute Resolution website (, and especially the section entitled, "I got a surprise bill. Can I submit a request for arbitration?") lists conditions when a health care bill may not qualify under Arizona law for the dispute resolution process.  But for those that do, the enrollee will only be responsible for paying the enrollee's cost-sharing amounts (copay, coinsurance and deductible) if the enrollee provides information the Department needs, and participates in an informal settlement teleconference with the health care insurer and the health care provider.

Fire Readiness and Your Insurance Coverage

Complete three steps to be prepared

STEP ONE: Inventory your contents. 
Making a record of what you have provides two major benefits.  First, it could help you estimate the cost of replacing your contents, which you could use to make sure you have enough insurance coverage.  Second, it will help you identify missing or destroyed items if you need to file an insurance claim. Keep your inventory records in a safe place outside your home, such as a safe deposit box at a bank, or in a secure online location. 

  • The National Association of Insurance Commissioners (NAIC) has a free app called, “MyHome,” available from Google Play and from the Apple App Store, which can help you keep track of your personal property. 
  • The Insurance Information Institute provides advice that can make creating a home inventory easier (

STEP TWO: Understand what your homeowners’ insurance policy covers.
If you do not have your policy on hand, get a copy from your insurance company or insurance agent. Then, make sure your policy provides enough coverage for your dwelling, contents and additional living expenses.

  • Dwelling Coverage:  This pays to reconstruct your home, from ground up if necessary.  It does not include the cost of the land on which your home sits because you will still have that, but it should include the cost to remove a destroyed structure and replace it a home that is similar to what you had prior to the fire.
  • Contents Coverage:  This pays to repair or replace your personal belongings. Your policy may provide contents coverage based on a set percentage of your dwelling coverage, but you can pay for more contents coverage if you think you need it. 
    • Check to see if your coverage will pay “actual cash value” or “replacement cost.”  Actual cash value (ACV) means what an item was worth when it was destroyed based on its initial cost minus depreciation or loss in value due to its age, condition and wear-and-tear.  Replacement cost (RC) means the cost to replace or repair damaged or destroyed property with materials of “like kind and quality”. Claims for damaged or destroyed items will initially be paid based on the ACV of the item.  When the item is replaced, a copy of the receipt must be provided to the insurance company to obtain payment of the balance owed.  Many policies require the damaged items to be replaced within six (6) months.
    • If you have expensive items, such as artwork, jewelry or computers, you can purchase or increase “scheduled” property coverage to make sure you have sufficient coverage for those items.
  • Additional Living Expense (a.k.a. Loss of Use) Coverage. This pays additional costs you may resulting from the property damage.  For example, if you are not able to live in your home, your policy may cover the costs of lodging and food, boarding your pets, etc.

Importantly, insurance policies are often lengthy, detailed documents.  Do not hesitate to contact your agent or insurance company representative if you have any questions. 

STEP THREE: Minimize your fire risk.
Periodically inspect your home for overloaded power strips, damaged electrical cords or other potential fire hazards.  Keep vegetation and combustible materials away from your home.  If you are in an area that is at higher risk for wildfire, follow “Avoiding Wildfire Damage” guidelines published by the Federal Emergency Management Agency ( 

Remain organized and keep good records

If you are the victim of a fire, remaining organized after an event can be difficult, but it is essential so that you can receive the benefits that your insurance coverage provides.

  • Keep all receipts for living expenses (housing, food, etc.) and for all items that you replace or repair.  Insurance companies may require that you submit original receipts. You should either copy, scan or take clear photos of receipts to provide yourself a backup. 
  • Take photos of your property and the damage.
  • Keep records of all your conversations, emails and letters about your claim with your insurance company and agent.  Take notes of conversations, documenting who you talked to, when you talked to them and what you were told. When possible, send an e-mail message to the person with whom you had the conversation to confirm your understanding of what you were told.
  • Do not throw away or destroy damaged property until your insurer inspects the property and tells you in writing/e-mail that you can do so.
  • Take an inventory of the damaged contents.  If you have an inventory from before the fire, use it to help identify items that were damaged/destroyed. 
  • When the insurer inspects the damage, do a complete walkthrough of your property and point out any issues or concerns you have.
  • When beginning the repair process, get multiple repair estimates from licensed contractors (look up records on the Arizona Registrar of Contractors “Contractor Search” page at with good reputations (look up records on the Better Business Bureau website at
  • Don’t delay.  Insurance policies generally have restrictions on how long after a fire you can file claims.

Persons with disabilities may request materials in an alternative format by contacting our Americans with Disabilities Act Coordinator at (602) 364-0108. 

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