CDI Imposes Record Penalties Against United

California Department of Insurance (DOI) Commissioner Dave Jones issued more than $173 million in penalties of against United Healthcare for violating the insurance code from 2005 to 2008. It’s the largest administrative penalty ever assessed against a California health insurer or plan. Jones says that the fine is warranted because no other insurer has violated the insurance laws hundreds of thousands of times. And no other insurer has repeatedly misrepresented its business practices, failed to correct the root causes of its violations, or ignored its statutory obligations to the extent found in the case. The administrative proceeding arises from problems that surfaced after United Healthcare’s acquisition of PacifiCare in 2005. Shortly after the transaction, the California Medical Association (CMA) saw a spike in complaints from its  members about the way PacifiCare was processing claims and contracts. After conducting its own investigation, the DOI filed an administrative proceeding against United Healthcare, charging PacifiCare with violations that included the following:

● Failing to give providers notice of their appeal rights and members notice of their right to an independent medical review. |
● Failing to pay claims and interest on late-paid claims in a correct and timely manner.
● Failing to acknowledge receipt of claims.
● Failing to respond to provider disputes in a timely manner.
● Closing claims files illegally
● Sending untimely collection notices for overpayment. Commissioner Jones sustained the findings of the administrative judge that PacifiCare committed over than 900,000 violations of the law. United Healthcare has appealed Jones’ decision to a California superior court.

Last Updated 09/16/2020

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