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Regulation and Compliance > State Regulation

Texas Sues HMO Over Group Practice Role

By Staff Writer

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NU Online News Service, Feb. 12, 11:19 a.m. – Texas Attorney General John Cornyn is suing PacifiCare of Texas Inc. in state court in Austin, Texas, over what he alleges are problems with unpaid claims.

PacifiCare of Texas, a unit of PacifiCare Health Systems Inc., Santa Ana, Texas, uses large group medical practices, or “delegated networks,” to help administer coverage. Three of the group practices in its network have filed for bankruptcy, Cornyn says.

Cornyn is accusing PacifiCare of Texas of failing to ensure that the group practices pay bills from hospitals, clinics and outside doctors quickly enough to comply with state prompt-payment law. PacifiCare has a responsibility to complying with the prompt-payment law, even when it turns administrative responsibility over to delegated networks, Cornyn says.

Cornyn is asking the state court for an injunction requiring PacifiCare to comply with state laws, and he is also asking the court to hold PacifiCare liable for any harm caused by violations of the state prompt-payment law.

PacifiCare responded with a statement expressing shock and disappointment at Cornyn’s suit.

“PacifiCare has monitored and managed its delegated networks consistent with state law,” the company says. “The attorney general’s unsubstantiated allegations on this issue are without merit and the company will defend itself vigorously.”

PacifiCare is now paying claims in an average of five days, and it has already advanced large sums of cash to the group practices in its provider networks to cover the cost of care for PacifiCare members, the company says.

“The attorney general is asking PacifiCare to, in effect, pay medical claims twice, which is not otherwise required by state law,” the company says.

PacifiCare has also responded to the insolvency of some group practices by making $43 million in payments that were really the responsibility of the group practices, PacifiCare says.

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