The Department of Financial Regulation announced Tuesday a $1.8 million award from Companion Life, a South Carolina health insurance company that sold inadequate policies to Vermont college students.
The settlement is the largest ever reached by DFR, said Mike Pieciak, the department’s commissioner. He called it a “significant penalty.”
Pieciak said his department began investigating the student health insurance market more broadly after receiving a complaint about a different company in 2015.
DFR found Companion Life violated Vermont law in 2016 when it denied coverage to 212 students for procedures that are mandated coverage. Those included mental health, athletic injury and substance abuse treatment procedures.
Students ended up paying out of pocket. As part of the settlement, $481,243 will be going to students whose claims were wrongfully denied.
“This significant penalty sends a strong and simple message to the financial service companies that fail to comply with Vermont’s consumer protection laws,” Pieciak said. “There will be firm consequences.”
Companion Life did not immediately return requests for comment.
Companion Life insurance plans were sold to students through 10 Vermont institutions: Burlington College, Champlain College, College of St. Joseph, Green Mountain College, Landmark College, Middlebury College, New England Culinary Institute, Norwich University, St. Michael’s College and Sterling College.
Pieciak said these colleges relied on insurance brokers to find companies like Companion Life to sell students plans. He thinks it was not unreasonable that the colleges assumed Companion Life was in compliance with state law, and that the compliance failures fall on the company, not the schools.
Companion Life is no longer offering student healthcare plans in Vermont, but it is still providing other policies in different insurance areas in the state, Pieciak said. Part of the settlement order, he said, requires Companion Life to improve oversight for all of its national operations and that the company gain prior approval from DFR before entering into Vermont’s student health insurance market again.
The settlement money is being divided between the department and other state offices to fund educational campaigns to inform students about health insurance. Pieciak said the amount each student will receive will depend on how much they had to spend out of pocket. Some will receive little, while others will get tens of thousands of dollars, he said.
Pieciak said that any student who feels they were wrongly denied coverage for procedures under a Companion Life policy during the 2014–15 and 2015–16 academic years should contact his office to receive compensation.
Mike Fisher, chief healthcare advocate for Vermont Legal Aid, said he’s looking forward to using the settlement money his office will be receiving — a total of $225,000 — to educate students about healthcare coverage.
“I’m excited to be able to step in,” Fisher said, “and to put this money into play in doing targeted, special outreach and educational campaigns and advocacy for Vermonters who live on Vermont’s campuses.”