UnitedHealth’s PacifiCare Unit Hit With Record $3.5M Fine in California
As expected, the Department of Managed Health Care on Tuesday announced a record $3.5 million fine against PacifiCare, a subsidiary of UnitedHealth Care, the Sacramento Bee reports (Chan, Sacramento Bee, 1/30).
The fine comes after a joint investigation with the state Department of Insurance found that the insurer had more than 130,000 alleged claims-processing violations from July 1, 2005, through May 31, 2007.
Regulators said that PacifiCare improperly denied 30% of claims that were reviewed during the investigation. In addition, they said that the insurer often delayed beyond the 30-day period payments to physicians and hospitals (Darcé, San Diego Union-Tribune, 1/30).
Doctors had complained of:
- Claims being improperly denied;
- Late payments;
- Delays resolving problems; and
- The insurer not acknowledging that claims were received.
DMHC regulates HMO products in California, while the Insurance Department has oversight of PPO and other health plans (California Healthline, 1/30).
On Tuesday, Insurance Commissioner Steve Poizner (R) said his department also will seek additional fines against PacifiCare for the alleged violations, the Los Angeles Times reports (Girion, Los Angeles Times, 1/30). Poizner said that fines for each alleged violation range from $5,000 to $10,000.
According to the Wall Street Journal, they could "theoretically add up to between $650 million and $1.3 billion," but "several analysts said additional fines would likely be far lower given the amounts traditionally levied in California" (Fuhrmans, Wall Street Journal, 1/30).
The maximum fine only will be levied if "authorities prove all the violations and show they were committed as part of a deliberate scheme," the AP/Contra Costa Times reports (Wohlsen, AP/Contra Costa Times, 1/29).
An administrative law judge will hear the charges brought by the Department of Insurance.
PacifiCare spokesperson Tyler Mason said that the company has taken "aggressive steps" to address the issues and improve service. He also said the insurer has added 50 full-time workers to handle claims issues.
PacifiCare has not decided whether it will pay the $3.5 million fine or if it will pursue an appeal, Mason said (Feder Ostrov, San Jose Mercury News, 1/30).
"We have already taken and continue to take aggressive steps to address the issues raised by the departments and to improve our operational performance in California," David Hansen, regional CEO for UnitedHealth, said (Wall Street Journal, 1/30).
On Tuesday, Poizner also said that the insurance department will begin a new set of audits on the eight largest health insurers in the state in an effort to crack down on billing practices similar to problems at PacifiCare, the Union-Tribune reports (San Diego Union-Tribune, 1/30). The insurers include:
- Blue Shield of California;
- Health Net; and
- WellPoint, which operates Blue Cross of California (Sacramento Bee, 1/30).
Representatives from WellPoint and Blue Shield declined to comment on the prospective audits (Los Angeles Times, 1/30).
Poizner said, "I want to send a clear message to every health insurance company in California that I won't tolerate any company deploying a shoddy claims-filing system" (San Diego Union-Tribune, 1/30). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.