UnitedHealth sues insurance commissioner over fine

By From page B6 | July 12, 2014

SANTA ANA — UnitedHealth Group has sued California’s insurance commissioner to block a $173.6 million fine the insurer incurred for violations during a botched acquisition.

The lawsuit was filed Thursday in Orange County Superior Court, the Los Angeles Times reported. Minnesota-based UnitedHealth said Commissioner Dave Jones was abusing his power and setting a dangerous precedent by seeking such stiff punishment for relatively minor violations.

State insurance regulators said UnitedHealth, the nation’s largest health insurer, committed more than 900,000 violations after the 2005 takeover of Cypress-based PacifiCare. UnitedHealth has acknowledged the acquisition didn’t go as planned. The company acknowledges numerous mistakes in processing medical claims and customer applications.

In its June 9 decision, the insurance department said its proposed fine “appropriately reflects the gravity of PacifiCare’s offenses and provides the necessary deterrent effect going forward.”

Byron Tucker, a spokesman for the insurance department, told the Times the agency hadn’t had time to fully review UnitedHealth’s lawsuit.

But he said, “Commissioner Jones carefully applied the law, and the department is confident the penalty will withstand the lawsuit.”

Four years ago, California sought a penalty of nearly $10 billion against the insurer — but that record fine didn’t stand. Last year, an administrative law judge rejected much of the state’s case and said UnitedHealth should be fined no more than $11.5 million.

Last month, Jones rejected that ruling in a 220-page decision and imposed the $173.6-million penalty. He ordered UnitedHealth to pay it by July 22.

Stephen Scheneman, president of UnitedHealth’s PacifiCare unit, said the outsized fine “threatens to paralyze the health care system in the state, resulting in more costs and bureaucracy for Californians.”


The Associated Press

The Associated Press


Discussion | No comments

The Daily Republic does not necessarily condone the comments here, nor does it review every post. Please read our Terms of Service and Privacy Policy before commenting.

  • Recent Articles

  • Enter your email address to subscribe and receive notifications of new posts by email.

  • Special Publications »

    Use of this site constitutes acceptance of our Terms of Service (updated 4/30/2015) and Privacy Policy (updated 4/7/2015).
    Copyright (c) 2015 McNaughton Newspapers, Inc., a family-owned local media company that proudly publishes the Daily Republic, Mountain Democrat, Davis Enterprise, Village Life and other community-driven publications.