ALBANY — A second Capital Region health insurer has been hit this summer with a hefty fine for mishandling claims.

For failing to properly inform New Yorkers about ways to appeal denied health insurance claims, the Capital District Physicians’ Health Plan and an affiliate are being hit with $600,000 in fines, the state Department of Insurance announced Tuesday.

An Insurance Department investigation found that CDPHP and Universal Benefits repeatedly failed to send to members explanation of benefits notices or EOBs. Under a settlement agreement, the Albany health insurer will contact more than a quarter of its 400,000 members in 29 central and eastern New York counties, ensuring they received proper denial notices.

In an e-mail, CDPHP spokeswoman Ellen Boyle attributed the EOB problems to “technical issues that occurred in multiple claims documents as part of our attempt to reduce paperwork … These issues had no impact on member care or provider services.”

The settlement covers 121,911 claims filed between 2004 and 2006, though the Insurance Department’s investigation included the period between 2001 and the first quarter of 2006. CDPHP will have to pay interest to members whose claim denials are overturned in the appeal process.

Insurers are required by law to furnish members with EOBs. The notices detail claim processing procedures, costs to be covered by the insurer and consumer, plus steps for making appeals to claim denials.

“The right to appeal the denial of claims is one of the most important protections that consumers have today, but it isn’t as meaningful if people are not told of their rights by the company,” said Karen Scharff, executive director of Citizens Action of New York, a consumer advocacy organization.

The EOB investigation marks the Insurance Department’s latest attempt to make Capital Region insurers pay for improperly handing members’ claims. The agency last month hit Buffalo-based HeanlthNow New York with over $1 million in fines. The parent of BlueShield of Northeastern New York in Latham improperly denied coverage for women seeking infertility coverage.

Unlike the HealthNow settlement, which largely stemmed from an Ithaca woman’s complaint, the CDPHP case originated with a routine agency market conduct investigation, said Insurance Department spokesman Ron Klug. The insurer has 90 days to submit to the Insurance Department a plan to improve its EOB requirement compliance.

“[W]e have begun to address and rectify these issues and will have them completed in the time prescribed,” Boyle said.

The Insurance Department investigation also uncovered instances when CDPHP inaccurately detailed rate increases and falsely suggested the state agency had signed off on the hikes. The insurer also failed to use a license claims adjuster to negotiate out-of-network provider claims. Also, CDPHP did not hear and settle claims in a timely manner and committed adjudication errors.