HealthNet fined $1M for non-disclosure of cancellation bonuses

Following disclosures forced by a lawsuit, HealthNet has been fined $1 million by the state's Department of Managed Health Care (DMHC) for failing to admit that it did indeed have plans in place which compensated employees partly for how many policies they could cancel.

According to the DMHC, it asked HealthNet on two separate occasions whether it had such plans in place, but HealthNet execs denied it. (I can only class this as "chutzpah.") Last week, however, proof that it was indeed basing bonuses partly on rescissions came to light, when HealthNet was ordered to produce documents as part of a suit filed by a former insured whose policy was canceled.

Unfortunately for Health Net, the fine addresses only to its failure to disclose details of its incentive plan. The DMHC is still investigating whether Health Net (and other state health plans) are making illegal rescissions--which leaves it wide open for additional fines and administrative sanctions. In short, the situation is likely to get uglier in coming months.

To find out more about the fine:
- read this DMHC press release

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