Bad Company

You reap what you sow -  Even if it is a multi-billion dollar insurance company, this universal truth still applies. Health insurers will not escape the consequences of its actions.

Patsy Bates, 52, a hairdresser from Lakewood (Los Angeles County), had been left with more than $129,000 in unpaid medical bills when Health Net Inc. canceled her policy in 2004. The insurer contended Bates failed to disclose a heart condition and lied about her weight when she applied for the policy in July 2003.

But arbitration judge Sam Cianchetti ordered Health Net to pay her medical bills, plus $8.4 million in punitive damages and $750,000 for emotional distress.

“It’s hard to imagine a situation more trying than the one Bates has had to endure,” Cianchetti wrote in his findings. “The rug was pulled out from underneath, and that occurred at a time when she is diagnosed with breast cancer, one of the leading causes of death for women.”
One of many articles here

Los Angeles City Attorney Sues Health Net, Alleging Scheme to Cancel Policies
“This practice of post-claims policy cancelation is unlawful, unfair and fraudulent,” said City Attorney Delgadillo. Health Net went so far as to create a secret unit to cancel policies when patients needed expensive medical treatment. Health Net Inc. saved about $35 million by illegally canceling the coverage of at least 1,600 patients over four years, the city attorney’s office alleges in the lawsuit filed Wednesday. “Health Net provided benchmarks and economic incentives to the individual responsible for these illegal cancelations, should she reach the company’s goals,” City Attorney Rocky Delgadillo said in an interview. One of many articles here Read the actual Court Complaint here

The Department of Managed Healthcare, which oversees Pacificare/United’s HMO business, also fined the insurer $3.5 million for its mishandling of managed care claims. <SNIP>

A joint investigation by the two agencies found that Pacificare, which merged with United Health in 2005, failed to pay claims in a timely manner, wrongly denied claims, incorrectly paid claims, lost patients’ records, mishandled provider networks and failed to respond quickly to complaints. The investigation uncovered 130,000 alleged violations of state law.” One of many articles here
PacifiCare’s alleged violations cited by CDI and DMHC include:

* Wrongful denials of covered claims
* Incorrect payment of claims
* Lost documents including certificates of creditable coverage and medical records
* Failure to timely acknowledge receipt of claims
* Multiple requests for documentation that was previously provided
* Failure to address all issues and respond timely to member appeals and provider disputes
* Failure to manage provider network contracts and resolve provider disputes

NEW YORK, NY (February 13, 2008) – Attorney General Andrew M. Cuomo today announced that he is conducting an industry-wide investigation into a scheme by health insurers to defraud consumers by manipulating reimbursement rates. At the center of the scheme is Ingenix, Inc., the nation’s largest provider of healthcare billing information, which serves as a conduit for rigged data to the largest insurers in the country.

Cuomo also announced that he has issued 16 subpoenas to the nation’s largest health insurance companies including Aetna (NYSE: AET), CIGNA (NYSE: CI), and Empire BlueCross BlueShield (NYSE: WLP), and that he intends to file suit against Ingenix, Inc, its parent UnitedHealth Group (NYSE: UNH), and three additional subsidiaries.

The six-month investigation found that Ingenix operates a defective and manipulated database that most major health insurance companies use to set reimbursement rates for out-of-network medical expenses. Further, the investigation found that two subsidiaries of United (the “United insurers”) dramatically under-reimbursed their members for out-of-network medical expenses by using data provided by Ingenix.
Official press release here

Detailed article here