Cigna Health and Life Insurance Co. was fined$2 million on Tuesday by New York’s Department of FinancialServices for violating state insurance law.

An investigation by the department found that Connecticut-basedCigna illegally sold stop-loss insurance, which may only be sold tolarge group employers that self-fund underlying medical expenses in aneffort to limit their liability in the event of an unexpectedamount of claims. The investigation also found that Cigna illegallysold fully insured policies outside of the state to New York-basedsmall groups with New York employees, which harmed thecommunity-rating program, DFS said. New York mandates purecommunity rating, meaning that insurers aren’t able to charge moreto older customers who are more likely to have a higher need formedical care.

“By deliberately choosing to write New York risks outside of NewYork, Cigna’s actions harmed New York’s community-rating programfor small group employers,” Superintendent Maria Vullo said in anews release. “Cigna cherry-picked risks, which may have improperlyinduced forum shopping in the New York small-group market.”

In an emailed statement, a Cigna spokesman said “our objectiveis to improve the health and health care affordability in thecommunities we serve. We have agreed with the New York Departmentof Financial Services to resolve this matter and would welcome theopportunity to work with the Department and insurers in developingindustry guidance regarding the scope of New York’s small group lawin order to ensure a level, competitive playing field.”

The investigation by DFS began after the regulator receivedcomplaints in July 2016 about Cigna selling stop-loss and fullyinsured health insurance policies outside of the state to NewYork-based small employer groups, which the state and AffordableCare Act defines as having one to 100 employees.

DFS states in the order that between Jan. 1, 2016, throughJan. 1, 2017, Cigna violated state insurance law byissuing 43 fully insured health insurance policies and 38 stop-lossinsurance policies outside the state to evade the small groupcommunity-rated market in New York, harming the integrity ofNew York’s small-group risk pool.

The consent order signedby Cigna’s president, Julia Huggins, claims that the insurerinitially agreed to end selling of stop-loss insurance and fullyinsured health insurance policies outside New York, but Cigna“later resumed its practices.”

As part of the agreement, the insurance company must providewritten notices to all small groups that were issued coverage underthe illegal circumstances by Dec. 1. Cigna must also provide thestate agency with a list of the names and addresses of all smallgroup policyholders to whom written notices were sent.