UnitedHealth Group

$420M settlement for UnitedHealth's McGuire moves ahead

Anne Zieger — Fri, 15 Aug 2008 13:52:35 -0400

As just about everyone knows by this point, the courts decided last year that former UnitedHealth CEO Bill McGuire had been a bad boy when it came to stock options. McGuire was asked to give up $420 million in dicey stock-option gains and retirement pay to settle shareholder and SEC complaints over how the stock options were awarded. (We're talking a slight case of backdating for profit here.)

Despite this decision, which was arrived at by a special litigation committee, things reached a stalling point after that, notes the Wall Street Journal. A judge overseeing the case decided not to finalize the agreement, as he wanted to know whether he had to follow the word of the litigation committee. Delay, delay and more delay.

Well, now, it seems that the Minnesota Supreme Court is ready to move things along. Yesterday, the court concluded that the judge has to defer to the litigation committee, as long as it was operating in good faith and decided things independently. So, maybe now Dr. McGuire will end up paying out his backdating gains.

To learn more about the decision:
- read this Wall Street Journal blog item

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UnitedHealthcare subsidiaries to pay $800K in fines

Anne Zieger — Fri, 25 Jul 2008 11:35:42 -0400

UnitedHealthcare subsidiaries have agreed to pay almost $800,000 in fines to settle allegations by the North Carolina Department of Insurance that they'd violated state law regarding claims payment and other issues. This is the second time UnitedHealthcare has settled with the state in the past five years, having paid $2.2 million in 2004 to settle with regulators over problems with claims processing.

The 2004 settlement led to a broader investigation and agreement with regulators in 39 states and the District of Columbia, all of whom settled with UnitedHealthcare earlier this year. In the larger settlement, UnitedHealthcare resolved concerns noted by state regulators in several areas, including claims processing, settlement and payment; coordination of benefits; appeals, grievances and complain resolution; explanation of benefits and provider networks.

To learn more about the settlement:
- read this N.C. Department of Insurance press release

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UnitedHealth settles securities suit for $895M
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UnitedHealth settles securities suit for $895M

Anne Zieger — Thu, 03 Jul 2008 11:34:07 -0400

UnitedHealth Group has agreed to settle a federal securities class-action lawsuit brought by a group of major shareholders for $895 million. The move, coming at a time of financial challenges for the health plan industry as a whole, should have a big impact on UnitedHealth's operations. The company will cut 4,000 jobs and is warning of weaker profits, already challenged by the slow U.S. economy and higher Medicare costs.

The lawsuit was brought by the California Public Employees Retirement System (CalPERS) over the health plan's stock-option grant practices. Such practices had helped lead to the departure of previous CEO William McGuire, who resigned in December 2006 over the scandal that arose when the company's practice of backdating options to favorable dates was discovered. The proposed settlement will impose new protections against such skullduggery, including a mandated holding period for options granted to execs and shareholder approval of any stock option re-pricing.

To learn more about the proposed settlement:
- read this Modern Healthcare article (reg. req.)

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CA doctors say state health plans made $4.3B in profits

Anne Zieger — Thu, 26 Jun 2008 01:08:11 -0400

In a study sure to raise the stakes in its battle to regulate HMO spending, the California Medical Association has released a study concluding that California health plans generated $4.3 billion in profits last year, while in some cases paying their executives high salaries. It also noted that HMOs spent $6 billion on administrative costs last year--including some high executive salaries--which it contends should have gone toward lower premiums or better benefits. It singled out annual salaries topping $1 million for CEOs at Aetna, CIGNA, Health Net, UnitedHealth Group and WellPoint.

The report comes as part of the group's longer-term campaign to enact laws governing how health plans spend their money. The association is backing a bill which would require health plans to spend at least 85 percent of their annual income from premiums on medical care. The CMA study notes that if the bill were already in place, almost $1.1 billion dollars would have been spent on patient care.

To learn more about the study:
- read this San Francisco Chronicle article

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U.S. carriers expand health insurance businesses into China

Abby Christopher — Wed, 25 Jun 2008 12:00:43 -0400

Aetna has opened an office in Shanghai, where it hopes to expand its health insurance business. Other insurers such as CIGNA, UnitedHealth Group and WellPoint also have established roots in China, all with an aim to sell supplemental health insurance. "It's a real hotbed place for large U.S. multinational or multinational corporations [from other nations] to open or expand their offices," said Martha Temple, president of Aetna Global Benefits. As the U.S. economy--and as a result, the health insurance market--becomes increasingly unstable, U.S. carriers are looking for new ways to expand into other markets such as China.

For more information:
- read the full Hartford Courant story

Blue plans see 18 percent drop in operating earnings for '07

Anne Zieger — Thu, 19 Jun 2008 13:38:21 -0400

A new analysis by healthcare research and consulting firm the Sherlock Co. found that last year was not a good one for the nation's Blue Cross and Blue Shield plans, which lost money despite increased revenue. The Blue plans posted an overall 18.2 percent decline in operating earnings during 2007, though revenue rose 7.4 percent. Among the 39 plans, six actually showed improved operating margins of 1 point or more, but nine had worsening operating margins of at least 3 percentage points, according to Sherlock.

These results come, in part, because the plans' revenues aren't keeping pace with medical costs. The plans' median premium-rate increase during 2007 was 5.4 percent, but median medical costs per member rose by 6.4 percent. What's more, administrative costs grew at a median rate of 7.6 percent per member. Meanwhile, insured membership among the plans fell by 1.4 percent, to 51.5 million, and operating margins dropped 1 point for 2007, to 3.3 percent.

Given these numbers, it seems likely that the Blues will be among the crowd of insurers who raise rates substantially for next year. Several health plans announcing troubling results this year have already vowed to jack up rates for 2009.

To learn more about this study:
- read this Modern Healthcare article (reg. req.)

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SEC backs universal health insurance ballot measure

Tue, 27 May 2008 06:59:55 -0400

While most of the discussion of universal healthcare coverage takes place outside of the corporate arena, some activist shareholders may have succeeded in forcing the discussion into stockholder debates. Of late, groups of public company shareholders such as religious groups and labor unions have pushed a proposal asking shareholders to vote on a statement endorsing universal health insurance coverage. The statement asks companies to offer official support for universal, continuous, affordable health insurance. Many companies have resisted vigorously, including, interestingly enough, health insurer UnitedHealth.

Their tactic may be working. Over the past several months, the Securities and Exchange Commission has told a group of large public companies--including Boeing, General Motors, United Technologies, Wendy's International and Xcel Energy--that they must include the proposal in their proxies. Generally speaking, companies don't have to let shareholders vote on proposals if they don't relate to a company's ordinary business operations. However, the SEC said that it sometimes is appropriate for shareholders to express views by voting on significant social policy issues--and that it feels healthcare has reached the level of importance necessary to meet such a standard.

To learn more about this issue:
- read this piece in The New York Times

AMA, SEIU ask court to stop UnitedHealth deal

Fri, 16 May 2008 06:59:56 -0400

A group of opponents including the AMA and the SEIU Nevada have filed suit to stop UnitedHealth Group's planned buyout of Las Vegas-based health plan Sierra Health Services. The deal already has been approved by the U.S. Department of Justice, but the groups are asking a federal court to reject the DoJ's decision. Groups opposing the buyout also include the Clark County Medical Society, Nevada State Medical Association and Clark County Commissioner Chris Giunchigliani. The groups say that the combined entity poses the threat of cutting physician compensation, as it would blend two of the three largest buyers of medical services in Clark County.

The two companies previously had signed a consent order with the DoJ that would allow the $2.6 billion deal to move ahead as long as UHG sold most of its SecureHorizons Medicare Advantage business in Las Vegas. (Humana said it would buy UnitedHealth's MA plan for $185 million.) However, the consent order has to be approved by the court.

To learn more about this challenge to UnitedHealth:
- read this Modern Healthcare piece (reg. req.)

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Kaiser net income drops 64 percent

Tue, 06 May 2008 06:59:58 -0400

Oh, the dismay and rendering of garments that must be taking place in health plan boardrooms of late! Profits have taken a dramatic turn for the worse within several health plans, including UnitedHealth Group, Humana, Cigna, WellPoint and Health Net, reporting big drops for the first quarter of this year. (Interestingly, they all seem to be attributing losses to different causes, rather than some general malaise affecting the health plan industry as a whole.)

Now, Kaiser Foundation Hospitals and Health Plan continues spreading gloom and doom, announcing that it saw a 64 percent drop in net income during the first quarter of this year compared to the same quarter last year. It blamed investment losses for the drop, a plunge from $698 million during the first quarter of last year to $250 million for the first quarter of this one. Kaiser did increase operating income, however, from $521 million during the first quarter of last year to $545 million this year, a boost that includes the addition of 25,000 members this year.

To learn more about Kaiser's results:
- read this East Bay Business Times article

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UnitedHealth's Ingenix faces mounting legal troubles

Mon, 05 May 2008 06:59:58 -0400

A couple of months ago, New York Attorney General Andrew Cuomo rocked the health plan industry when he filed suit against UnitedHealth Group. In the suit, Cuomo argued that UHG was committing consumer fraud in how it sets rates for paying out-of-network physicians, specifically by setting artificially-low rates that leave consumers with big bills. Not only is this a big deal for UHG itself, it's a problem for the health insurance industry as a whole, as several major health insurers also use Ingenix data to set rates.

Now, a consumer is raising the stakes a bit by attempting to get class action status for a suit against Ingenix itself. In the suit, which was filed in Connecticut, plaintiff Jeffrey Weintraub contends that he was defrauded by a conspiracy in which health plans calculate lowball, out-of-network rates using bogus Ingenix data. Weintraub also names UHG, Oxford health Plans, Aetna, Cigna and other insurers in the suit.

Meanwhile, the industry is still waiting for Cuomo to drop the other shoe. While New York's AG has promised to sue Ingenix, he hasn't done so yet. Cuomo has said that he is investigating an "industry-wide scheme perpetrated by some of the nation's largest health insurance companies to defraud consumers."

To learn more about the case:
- read this Modern Healthcare article

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