Humana is settling charges that it required some small businesses to buy life insurance policies along with health coverage going back to 2006.
The insurer will pay a total of $4.5 million as part of a settlement reached with the Mississippi, Missouri and Wisconsin insurance commissioners, after allegations of product tying or "forced bundling," a practice common in other industries (most notably cable) that some states have limited for various forms of insurance.
Humana agreed to pay about $1.8 million in fines divided between 10 states and use the other $2.7 million for a consumer restitution pool, to compensate employers who were apparently required to buy life insurance along with group health policies.
Insurance regulators in ten states launched an investigation into Humana's practices in 2012 after a small business owner in Missouri reported being subject to forced bundling in a complaint with the Missouri Insurance Department.
The probe subsequently uncovered that some employers were also being subject to the bundling in Alabama, Arkansas, Georgia, Mississippi, Montana, North Carolina, Tennessee, Utah and Virginia.
"Policyholders should be able to choose individual insurance products without insurers bundling products together," said Missouri Insurance Director John Huff said in a media release.
Under the settlement, Humana agreed to explicitly notifying employers and insurance agents that buying group health policies is not contingent on buying life insurance.
For the restitution portion of the settlement, employers will receive a pro-rated share of the $2.7 million pool based on the premiums they paid between 2006 and 2011.
Humana also has to report back to Mississippi, Missouri and Wisconsin insurance regulators within 180 days with an update on notification of employers and agents and the status of the restitution fund.