California state insurance regulators are seeking fines against PacifiCare for problems including failure to pay doctors, loss of medical records, mismanaged claims and ignoring calls to correct those problems.
According to the Sept. 7 issue of the Los Angeles Times, state regulations allow for a maximum of $10,000 per violation, and the state is alleging more than 992,000 violations. Though unlikely, the potential fine could be $9.92 billion.
Insurance regulators said such a fine would likely be the largest against an insurer by a state regulator – and it would eclipse the $9.2 billion paid by UnitedHealth Group in late 2005 to acquire PacifiCare.
State agencies first brought charges against PacifiCare in early 2008, when The California Department of Insurance and the California Department of Managed Health Care took action on more than 133,000 alleged claims handling violations. In a joint press release from January 2008, the agencies said the move came after a joint investigation of PacifiCare's practices launched in 2007 as a results of "hundreds of consumer and provider complaints about claims payment problems by PacifiCare, particularly after it was acquired by United Healthcare in late 2005."
Hearings on the matter, which began last December, have uncovered additional alleged violations, bringing the total to nearly 1 million, according to the Times.
PacifiCare and UnitedHealth Group have vigorously defending themselves against the fines, maintaining that the bulk of the alleged violations – nearly three-quarters – stem from its alleged failure to inform doctors and patients of their rights to appeal coverage decisions.
"The allegations concerning claims processing by PacifiCare are simply not true," spokeswoman Cheryl Randolph told the Los Angeles Times. "By all objective measures, PacifiCare pays its claims timely and accurately."