Two health insurers ordered to use ’09 rates

Firms agree to comply but forge ahead with appeals

By Kay Lazar
Globe Staff / April 21, 2010

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A Suffolk Superior Court judge Wednesday ordered two of the state’s largest health insurers to submit April 2009 rates for insurance covering individuals and small businesses, the latest development in an ongoing dispute between the state and carriers over premium increases. Both companies said they would comply, even as they proceed with administrative appeals in an effort to charge higher rates.

Judge Stephen E. Neel said Harvard Pilgrim Health Care of Wellesley and Fallon Community Health Plan of Worcester must follow orders from the state’s Division of Insurance to submit premium increases formulated using last April’s base rates, instead of the higher figures the companies were seeking to use. The 2009 rates average 8 to 12 percent lower than what Harvard Pilgrim wanted, and 18 to 32 percent lower than Fallon’s 2010 premiums.

Four other insurance companies have already complied with the state’s order to base premiums on 2009 rates.

In his ruling, Neel wrote that Harvard Pilgrim and Fallon did not convince him that the state effort to cap rate increases was “contrary to the public interest.’’

Insurance Commissioner Joseph G. Murphy said in a statement that he was pleased with the court’s decision.

“Throughout this process we have been working to ensure consumers are treated fairly, and we went back to court to fight for small businesses and working families to give them immediate access to rate relief,’’ Murphy said.

State regulators, abiding by Governor Deval Patrick’s pledge to deny rates deemed excessive, turned down 235 rate increases proposed by six insurance carriers for individuals and small companies, which make up what is known as the small group market and includes about 800,000 people. The rates were to take effect April 1.

Murphy then ordered insurers to resubmit their rates using April 2009 prices. The insurance companies responded by seeking a court injunction that would allow them to charge the higher rates, but Neel last week ruled they must exhaust administrative appeals within the insurance division before moving forward with court action against the state. That process could take months.

The insurers said they would suffer severe financial losses if forced to bill at 2009 rates.

In a statement late Wednesday, Harvard Pilgrim spokeswoman Sharon Torgerson said the company will begin using the April 2009 rate, as directed. She also said it has initiated an administrative appeal.

“We stand by the integrity of our rate information supplied to the [division] and remain confident in the merits of our appeal,’’ she said.

W. Patrick Hughes, Fallon’s president and chief executive, said in a statement that his company also will use 2009 rates.

“We understand and share our customers’ concerns about the pressures they are experiencing as a result of rising health care costs,’’ he said. “We’ll continue working with legislators, the administration and other stakeholders to find ways to reduce the cost of care, which have been proven to be at the root of increasing health insurance premiums.’’

Insurers submit rates to the insurance division every month for different groups of customers. But the largest renewal date for the small group market is April 1.

Kay Lazar can be reached at