Health Net to pay $1.9 million fine for incomplete benefit forms

The insurer joins Aetna in paying New York for failing to provide members with required information.

By Emily Berry — Posted Oct. 28, 2010

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California-based Health Net became the second insurer fined in New York in October for deficiencies in its explanation of benefit notices, which explain to a member what medical treatment or services were paid for on their behalf.

Health Net agreed to pay a $1.9 million fine to the New York State Insurance Dept. for violations that occurred between October 2003 and September 2008.

The company's explanation of benefit forms didn't explain which service the claim pertained to, failed to explain the reason for denials and did not disclose members' rights to appeal denials, according to the agreement between the insurance department and Health Net.

"Consumers need clear information on how a health insurance claim was handled and what to do if they feel it was wrongly handled," Insurance Commissioner James Wrynn said in a department news release.

Health Net said in a company statement that it fixed the problem in 2008.

The department's examination of that five-year period uncovered instances when Health Net failed to pay claims on time, pay interest on late payments or pay the correct interest on a late payment.

The department announced Oct. 4 that it had fined Aetna $850,000 for similar violations, which Aetna admitted occurred between January 2003 and December 2005. Aetna said it had resolved the problems that led to the violations.

Health Net admitted breaking the rules, but it said the mistakes were not part of a company policy or a concerted effort to violate regulations, according to the department's news release.

Health Net sold renewal rights to its business in New York, Connecticut and New Jersey to UnitedHealthcare in 2009. Depending on how many of its 578,000 members in those states renew with United, the deal could be worth as much as $630 million to Health Net.

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