California insurance regulators say they could ask for as much as $1.3 billion in fines and other penalties in connection with allegations that a unit of a managed care company violated claims processing rules and other rules.
The California Department of Insurance says it is taking action against a health insurance company subsidiary of PacifiCare Health Systems Inc., Cypress, Calif., a managed care company acquired by UnitedHealth Group Inc., Minnetonka, Minn., in 2005.
A market conduct exam that covered files processed between July 1, 2005, and May 31, 2007, identified 130,000 violations of claims-handling standards, department officials allege.
Violations included some wrongful denials of covered claims as well as incorrect payments of claims, losses of documents, failures to acknowledge receipts of claims in a timely fashion, multiple requests for documentation that was previously provided, failures to respond to member appeals and providers in a timely fashion, and failures to manage provider network contracts and resolve provider disputes, officials allege.
PacifiCare already has paid more than $1 million to consumers and providers as a result of the investigation, officials say.
California law could permit regulators to collect “up to $650 million if all violations are proved and shown to be non-willful and up to $1.3 billion if all violations are proved and shown to be willful,” officials say.
The California Department of Managed Health Care has found similar violations at a PacifiCare health maintenance organization and assessed a penalty of $3.5 million, officials say.
UnitedHealth notes that it has not yet received any indication that the California Department of Insurance has determined a penalty amount.