The top California insurance regulator already is attacking one element of efforts by UnitedHealth Group Inc. to scoop up PacifiCare Health Systems Inc.[@@]

California Insurance Commissioner John Garamendi, who has been notoriously tough on past managed care deals, is criticizing a deal provision that would create a $300 million executive compensation package for PacifiCare executives.

The package is “unconscionable,” Garamendi says in a statement issued Tuesday. “It exemplifies the problem in a health care system where fewer and fewer people can afford to participate.”

Despite the harsh words about the proposed executive compensation package, Garamendi says he is “encouraged, but not yet convinced” of the merits of the proposed deal.

UnitedHealth, Minnetonka, Minn., announced in July that it wants to acquire PacifiCare, Cypress, Calif., by paying PacifiCare shareholders about $8.1 billion in cash and stock.

Garamendi has met with UnitedHealth and PacifiCare representatives, and he now says he will use the framework for the hotly debated 2004 acquisition of WellPoint Health Networks Inc., Thousand Oaks, Calif., by Anthem Inc., Indianapolis, as a template for evaluating other merger and acquisition proposals.

Anthem pledged that none of the $4 billion cost of the merger would be borne by California policyholders, and the company promised that more than $250 million in improved health care services would be delivered to underserved communities, Garamendi says.

“United and PacifiCare must meet this threshold, or this deal will not receive my approval,” Garamendi says.

Garamendi also says UnitedHealth must improve its systems for handling claims and paying providers.

“We will institute a regulatory mechanism to ensure that no inappropriate activities take place in this area,” Garamendi says.