South Dakota Fines Nebraska-Based Insurance Company

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South Dakota’s Division of Insurance has levied a $325,000 fine against a Nebraska-based insurer for violating South Dakota laws and regulations.

It is the largest such fine in South Dakota history, Insurance Division officials said. It comes after a three-year investigation of Omaha-based Ability Insurance Co.

Officials said state law requires the investigation report to remain confidential for a month. The Argus Leader newspaper has reported that Ability is accused of wrongfully denying claims for some long-term care policyholders.

Negotiating an agreement on the penalty took a long time because of the nature of the violations and ownership changes within the company, the insurance division said.

Long-term care policies offer consumers a way to manage the financial risks that come with aging. They can help pay for home health care, assisted living and nursing homes.

Ability has been sued in at least five states. The company says it has enacted reforms that should put an end to the lawsuits. Ability did not immediately respond to Associated Press requests for comment on the South Dakota fine made by telephone and email.

Claims denied by Ability have already been reprocessed, according to the Insurance Division.

“Claims were paid and re-adjudicated during the examination process and the company has instituted substantive changes that will be monitored going forward,” state Insurance Director Merle Scheiber said in a statement. “Although this process was confidential during the examination, the Division of Insurance has been continually protecting South Dakota consumers throughout this period.”

Gov. Dennis Daugaard last month asked South Dakota Labor Secretary Pam Roberts to review her agency‘s procedures for investigating consumer complaints against insurance companies in the wake of the Argus Leader’s report. Roberts’ review concluded that the Insurance Division needed more oversight from supervisors and the secretary.

Scheiber said the fine levied against Ability “should remind all long-term care companies that we expect them to play by the rules.”