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Life Health > Health Insurance > Your Practice

California Keeps Health Sub from Sending Cash Home

By Allison Bell

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California Insurance Commissioner Steve Poizner has stopped a health insurer operating in his state from paying a $120 million dividend to its parent company.

Poizner issued an order prohibiting PacifiCare Life & Health Insurance Company from transferring the payment to UnitedHealth Group Inc., Minnetonka, Minn. (NYSE:UNH).

Poizner says he is blocking the dividend payment because PacifiCare is involved in enforcement proceedings that could lead to PacifiCare having to pay substantial penalties.

UnitedHealth acquired PacifiCare in 2005. Since then, Poizner says, the California Department of Insurance has received complaints about how PacifiCare has handled claims.

Administrative proceedings relating to alleged claims-handling problems started in December 2009, officials say.

“Nobody knows what the outcome of the enforcement action will be,” Poizner says in a statement. “My order simply requires that the company keep the money where it would be available to satisfy any order that is issued.”

PacifiCare can ask for a hearing on Poizner’s decision to block the dividend payment.

UnitedHealth says it disagrees with Poizner’s refusal to let PacifiCare issue an ordinary dividend.

“It’s inappropriate to use this process to try to gain leverage in a separate case about administrative issues that have long since been addressed,” UnitedHealth says in a statement. “We are reviewing the decision and deciding upon our next steps.”

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