California regulators on Tuesday announced a $3.5 million fine against Cypress-based PacifiCare Health Systems Inc. for failing to process claims and pay doctors properly after its 2005 purchase by Minnetonka, Minn.-based UnitedHealth Group Inc.
The fine was the largest ever issued by the state Department of Managed Health Care, according to a California Department of Insurance press release. The two departments collaborated on the investigation.
The Department of Insurance said that results of its investigation indicate that PacifiCare committed 130,000 incidents of claims processing violations between July 2005 and May 2007.
“Market conduct examinations revealed that PacifiCare allegedly made large scale and willful decisions to use broken systems to process claims and respond to providers, while continually and effectively collecting premiums,” according to the press release.
Those violations have to be proven in an administrative hearing, and could result in hefty fines ranging from $650 million to as much as $1.3 billion.
In a statement Tuesday, PacifiCare said it “has made solid progress” in addressing the findings of the regulators’ examinations and is working closely with both departments to resolve any outstanding issues.
