DOVER, DE – Delaware Insurance Commissioner Karen Weldin Stewart announced today that former insurance company executive Jeffrey B. Cohen, was sentenced to 37 years in federal prison and required to pay $137 million in restitution by U.S. District Court Judge William D. Quarles, Jr. in Baltimore, Maryland today.  Cohen had perpetrated multiple frauds upon policyholders of an insurance company controlled by him, and later threatened and planned to harm Delaware Insurance Department representatives and a Delaware Chancery Court judge.  The threats and plans to do violence were apparently in retaliation for the Commissioner’s shuttering of his insolvent insurance empire. Cohen had pleaded guilty in June to charges of fraud, aggravated identity theft, obstruction of justice and making false statements to Delaware insurance regulators.  His surprise guilty plea came after only 4 days of testimony in what was planned to be a month long trial.

Cohen owned and operated over a dozen companies, one of which, Indemnity Insurance Company RRG, became subject to Commissioner Stewart’s oversight after it re-domesticated to Delaware in November 2010.  Cohen’s empire began to unravel when the Delaware Insurance Department began examining Indemnity to confirm its financial fitness.  While that examination was ongoing a Department analyst became suspicious that a bank confirmation provided in a quarterly financial filing was fraudulent.  Soon afterward, the Delaware Chancery Court granted Commissioner Stewart’s request for an order to seize Indemnity to protect its policyholders from further loss.  Continued investigation by Commissioner Stewart’s team confirmed that the bank confirmation was bogus.  Other financial frauds were uncovered, including Cohen’s submission of additional false information to the Department, policyholders, other states’ regulators, and insurance rating agencies.  The Delaware Chancery Court agreed with the Department that Indemnity was insolvent and placed it into liquidation on April 10, 2014.  The liquidation order followed multiple legal challenges by Cohen and his entities which were rejected by the Delaware Chancery Court and ultimately the Delaware Supreme Court.  Cohen had also brought several lawsuits in the state and federal courts in Maryland in an effort to derail the Commissioner’s investigation.  The federal criminal charges arose from the investigation by the Commissioner’s representatives, and those charges were supplemented to include the discovery of weapons, bomb making materials, disguises and attack plans uncovered when federal law enforcement agents raided Cohen’s house to arrest him for the financial frauds.

Commissioner Stewart stated: “This type of criminal conduct is horribly sad. Cohen’s illegal acts caused terrible losses to innocent claimants and policyholders.  However, I am very proud that my Department acted so quickly and aggressively to uncover his misdeeds.  We took immediate action to minimize the loss to future policyholders and claimants. I hope this case sends a clear message that my Department will vigorously pursue any and all attempts to defraud the public.”

For more information, call 302-577-5259.

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(DOVER, DE) – Insurance Commissioner Karen Weldin Stewart today released Delaware’s Qualified Health Plan rates for Plan Year 2016.  The Commissioner, after review, submitted her approved rates to the Centers for Medicare & Medicaid Services (CMS) in August. CMS has final authority on the rates. CMS concurred with the Commissioner’s recommendations and announced their approval on September 21, 2015.

It is the Commissioner’s duty to evaluate the reasonableness of rates to ensure rates are not excessive, inadequate or unfairly discriminatory.

The Commissioner recommended approval of a 22.4% rate increase in the individual market for Highmark Blue Cross Blue Shield of Delaware, a reduction of 3.0% from Highmark’s June request of 25.4%.  Highmark had made a second request in late August for an additional 8% increase, for an overall rate hike of more than 33% which the Commissioner rejected out of hand.

Aetna Life Insurance Company’s request for a 16% increase in the individual market was also approved. In the small group market, Highmark’s request for a 12.7% increase was granted, as was Aetna’s request for a 6.1% decrease.

“My actuaries took a hard look at Highmark’s submitted rate request, and we were able to reduce it by 3.0%,” said Commissioner Stewart. “But Blue Cross franchisees across the country are making requests for increases of 25% or more, claiming the Affordable Care Act has unleashed pent-up demand by persons who have not seen a doctor for years.  Regulators have been approving significant rate increases throughout the country.”

BCBS plans have requested rate hikes greater than 30% in Oklahoma, Tennessee and Minnesota.  Last month Blue Cross Blue Shield New Mexico pulled out of that state’s healthcare exchange when denied a 51.6% increase.

Commissioner Stewart said, “I’m continuing to meet with other insurance companies to persuade them to join Delaware’s Health Insurance Marketplace and increase competition. Insurers have been discouraged by our state’s high health care costs.” According to a 2013 Wall Street Journal report[1] on health care spending nationwide, Delaware ranks third-highest in prescription drug costs, fourth in the cost of physician and clinical services, and ninth in the cost of hospital care.

The Department of Insurance held public information sessions in each county in June to receive comment on the proposed rate increases. Written comments can be found at the department’s website. The department expects to post all of the rates on their website by October 15, 2015. For details visit the Health Insurance Rate Filings page, http://www.delawareinsurance.gov/departments/rates/ratefilings.shtml

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[1] JOURNAL REPORTS: HEALTH CARE Health-Care Costs: A State-by-State Comparison

By LOUISE RADNOFSKY, Updated April 8, 2013 4:00 p.m. ET, http://www.wsj.com/articles/SB10001424127887323884304578328173966380066

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For Immediate Release

For more information: Frank Pyle @ 302-674-7353

 www.delawareinsurance.gov | Main Office: 302-674-7300

 (DOVER, DE)- Commissioner Karen Weldin Stewart today named attorney Hardy Drane as Deputy Commissioner for the Delaware Department of Insurance.

“I am happy to announce that I talked Hardy out of retirement and convinced him to come back and serve as my Deputy Commissioner,” said Stewart. “He has extensive knowledge of insurance and the law, and his expertise will be invaluable as the Department continues to grow.”

Drane was a lawyer with a major Wilmington law firm for almost 30 years, where his practice focused on insurance and environmental law. Following retirement from private practice, Hardy served as a Deputy Attorney General representing the Department of Insurance through July 2014. He has served on the boards of directors of a number of local nonprofit organizations including the Community Legal Aid Society, the Cathedral Choir School of Delaware, and the Rodney Street Tennis and Tutoring Association.

Drane was sworn in during a brief ceremony this morning and starts work immediately.

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For Immediate Release.
Media inquiries? Please contact Director of Communications Jerry Grant at 302-674-7303.

Highmark, Aetna Request Significant Health Insurance Rate Increases
Commissioner Karen Weldin Stewart Vows Vigorous Review

(DOVER, DE) Commissioner Karen Weldin Stewart announced today that she has received rate request filings from Highmark Blue Cross Blue Shield of Delaware and Aetna, Inc. for individual and small group plans to be offered on Delaware’s Health Insurance Marketplace in 2016.  Highmark is asking for a 25.4% increase in the individual market, while Aetna requests a 16% increase. In the small group market, Highmark seeks a 12.7% increase, while Aetna asks for a 6.1% decrease.

“Large rate increase requests like these are occurring in several states across the country and I know they will cause a hardship for many Delawareans,” said Stewart. “The increases are substantial and I’m going to do my best to reduce them. I am instructing my actuaries to examine vigorously Highmark’s and Aetna’s supporting data for the requests.”

Commissioner Stewart also announced that the Insurance Department will conduct public information sessions in June to receive comment on the proposed rate increases.  The sessions will take place at the following locations in the three counties:

Monday, June 15   1:00pm    Del Tech Owens Campus, Georgetown

Monday, June 15   6:00pm    Insurance Department, 841 Silver Lake Blvd., Dover

Tuesday, June 16   6:00pm    Carvel State Office Building, 820 N. French St. Wilmington

Representatives from Highmark and Aetna will be present at each session. Consumers and interested parties may also submit written comments to the Department at ratedivision@delaware.gov for 30 days between June 15 and July 15, 2015.

According to Title 18 of the Delaware Code, insurance companies may not charge rates that are “excessive, inadequate or unfairly discriminatory.” The staff at DOI reviews rate filings and independent actuaries retained by DOI review the supporting data to see if the rate changes are justified by the circumstances as presented by the insurance companies. The rate requests and the insurers’ justifications will be posted at www.delawareinsurance.gov during the 30-day comment period. The Commissioner reviews the actuaries’ findings and the public comment and works with the insurers to arrive at a rate.  That rate is submitted to the Centers for Medicare & Medicaid Services (CMS) for subsequent review. CMS must follow its own regulations and Delaware law before finally approving or denying the requests.

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For immediate release
Contact Jerry Grant 302-674-7303

Insurance Commissioner Urges Federal Regulators to Reconsider MetLife Classification

Delaware Insurance Commissioner Karen Weldin Stewart Asserts the Superiority of State Insurance Regulation by Challenging MetLife’s SIFI Designation

DOVER, DE  – In a letter to U.S. Treasury Secretary Jacob Lew and other federal regulators, Delaware Insurance Commissioner Karen Weldin Stewart has urged them to reconsider their vote to propose that MetLife be labeled as a “systemically important financial institution” (SIFI) and therefore subject to tougher federal regulation. “Based on my experience as an insurance regulator, and a regulator of one of MetLife’s larger insurance subsidiaries, I do not believe that MetLife’s businesses and corporate structure create the kind of systemic risk that Dodd-Frank’s SIFI designation process was designed to address,” she said. Stewart argues explicitly against the designation of MetLife and said state regulators are capable and competent to continue the oversight of the company.

Last month MetLife announced that the Financial Stability Oversight Council (FSOC), led by Secretary Lew, had made a “proposed determination” that MetLife should be designated a nonbank SIFI under the Dodd-Frank Wall Street Reform and Consumer Protection Act.  Under this law, the FSOC was given the power to designate financial firms whose failure would jeopardize the financial stability of the United States and label them SIFIs.  “As the MetLife group does not engage in any significant non-insurance activities, let alone activities that would create systemic risk, another layer of oversight over MetLife’s activities is redundant, unnecessary and will only serve to impede the quality of service MetLife provides to its customers and the value it delivers to its shareholders,” said Stewart.

The complete text of the letter may be found at

http://delawareinsurance.gov/docs/pdfs/insurance-commissioner-stewarts-letter-to-fsoc-regarding-metlife.pdf

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Contact Jerry Grant for more info at 302-674-7303