PacifiCare faces $1.33B fine

Man, California regulators are tough. Over the past year, I wouldn't be surprised if there had been more fines imposed by the state's Department of Managed Health Care (DMHC) then by state health plan regulators in all of the other states combined. Now, the state Department of Insurance is getting its piece of flesh. The DOI is expected to announce today that it will seek as much as $1.33 billion in penalties from Cypress, CA-based PacifiCare due to problems arising from its takeover by UnitedHealth Group.

Following up on consumer complaints that have come up since the merger was consummated two years ago, the DOI found 133,000 alleged violations of state laws and regs regarding payments for care, each of which carries a maximum penalty of $10,000 (producing the potential $1.33 billion exposure for UHG). Meanwhile, the state's DMHC contends that 30 percent of the claims it reviewed were improperly denied, in what it terms "very serious violations," according to executive director Cindy Ehnes. It is imposing an additional $3.5 million in fines.

To learn more about the fines:
- read this Los Angeles Times piece [1]

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