WellPoint pays hospitals $11.8M to settle bills from rescissions

Anne Zieger — Tue, 08 Jul 2008 11:29:43 -0400

Leading health plan WellPoint has agreed to pay $11.8 million to settle claims with hundreds of hospitals that it failed to pay after it dropped patients after treatment. WellPoint was sued by about 480 hospitals after it refused to pay them when it dropped policies of individual policyholders. The health plan had dropped these policyholders, it said, because the patients made mistakes on their applications or had pre-existing conditions. The patients, for their part, said that WellPoint subsidiary Anthem Blue Cross had improperly investigated their medical histories for evidence of such conditions after they'd submitted costly medical bills.

In their case, the hospitals said that Anthem should pay, given that the health plan authorized the care for patients who, at the time of treatment at least, were members in good standing. The fact that Blue Cross dropped the patients later had no bearing on the plan's obligation to pay these bills, the hospitals argued. Now, the hospitals will be reimbursed for these bills. As part of the settlement, they've agreed to stop trying to collect these bills from the patients.

Anthem (and WellPoint's) legal troubles on this front are far from over, however. It still faces a separate class-action suit from the state's doctors over unpaid bills for patients with canceled policies. There's also a class-action pending that was filed on behalf of more than 6,000 patients whose policies were canceled since 2001. Meanwhile, the state's Department of Managed Health Care is considering piling on more fees, having already imposed a $1 million fine last year after it concluded the rescissions were illegal. The new fines could be as much as $200,000 per violation on about 1,700 disputed cancellations.

To learn more about these legal issues:
- read this Los Angeles Times article

Related Articles:
California hospitals, MDs join Blue Cross payment suit
BC of California fined $1M for cancellations
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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.)

Related Articles:
UnitedHealth's CEO ousted over questionable stock options
UnitedHealth's McGuire gives up $400M in assets
AMA tries to block UnitedHealth acquisition