United Health Faces Fines In California Investigation of

By: Kimberly Chandler Email
By: Kimberly Chandler Email

A California probe into claims practices of United Health Group has created new concerns for foes of United Health’s pending buyout of Nevada-based Sierra Health Services, although Sierra Health executives say similar claims issues won't happen here.

United Health could face fines up to $1.3 billion because its PacifiCare unit allegedly handled claims unfairly after United Health, the nation's second-largest health insurer, took it over.

California regulators investigated and uncovered at least 130,000 alleged violations of state laws and regulations, including wrongful denials of covered claims, incorrect payments, lost documents and delays in handling claims.

Doctors' groups say they're worried about a carry-over of such problems to Sierra Health's operations if federal regulators approve United Health’s $2.6 billion buyout of the managed-care insurer.

United Health’s claims-paying track record in other states has been a key reason the American Medical Association, the Nevada State Medical Association and the Clark County Medical Society have opposed the Sierra Health buyout, said Larry Matheis, executive director of the state medical association.

Peter O'Neill, vice president of investor and public relations for Sierra Health, said consumers shouldn't be concerned about United Health’s purchase of his company, noting that Nevada Insurance Commissioner Alice Molasky-Arman made consistent claims-processing a condition of her August approval of the buyout.

"United continues to make assurances that there will be no wholesale changes to the way we do business here in Nevada," O'Neill said. "One of the attractive elements of this company for United was the fact that our business is run so well, and the fact that we have, for the most part, positive, long-standing relationships with the provider community."

O'Neill also said Sierra Health officials are confident that United Health is taking steps to address the violations the California Insurance Commission said it found in its investigation.

The Department of Justice is nearing the end of its antitrust review of the United Health-Sierra Health deal. That approval is the last one needed for the deal to go through. Regulators in Nevada, California and Arizona already have endorsed the plan.

Sierra Health has 310,000 members in employer-sponsored plans in Nevada and another 320,000 people in plans for retirees and government workers.


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