New York regulators have fined the Lincoln Financial Group $1.5 million for the company's failure to fix widespread claims-processing errors and for delayed reporting of the problem to state officials.
A consent order announced Tuesday by the state Department of Financial Services (DFS) also said that Lincoln Financial, headquartered in Radnor, Pennsylvania, and its life insurer-affiliates have paid $50.7 million to the beneficiaries of New York policyholders that was delayed because of the claims-processing problems.
The order said executives at the "highest levels" of Lincoln's management became aware in June 2008 of significant processing delays created by its 2006 acquisition of the Jefferson-Pilot Corp. But the DFS said claims backlogs remained uncorrected until Lincoln Financial completed an investigation of the issue in April 2015, the same month that the company first notified the DFS of the problem.
DFS Superintendent Maria Vullo said that while Lincoln Financial self-reported the problem to the state, it only did so years after its executives were aware of the deficiencies.
The agency said the company delayed — for months or even years — paying benefits on valid claims because of the processing problems.
"While we appreciate the steps that Lincoln has taken towards making beneficiaries whole, we stress the importance of keeping consumers from falling through the cracks during mergers and other types of business interruptions," Vullo said in a statement Tuesday.
Lincoln Financial spokesman Michael Arcaro said the company has taken steps to ensure that processing delays not be repeated.
"Lincoln self-reported the issues to the New York Department of Financial Services, and all claims related to this matter have since been resolved," he said in a statement.
