State fines health-care insurers $4.85 million

State regulators have imposed nearly $5 million in fines against California’s seven largest health plans for claims-payment violations, following an 18-month investigation.

The Department of Managed Health Care also ordered changes in the health plans’ claims practices, said DMHC Director Cindy Ihnes.

The fines targeted Anthem Blue Cross for $900,000; Blue Shield of California for $900,000; United/PacifiCare for $800,000; HealthNet for $750,000; Kaiser Foundation Health Plan for $750,000; Cigna for $450,000; and Aetna for $300,000 for a total of $4.85 million.

State regulators contended that the violations could cripple health-care delivery.


“Improper payment of provider claims runs the risk that our health care delivery system could grind to a halt. Our audits have found that some health plans may consider their mistakes a ‘cost of doing business’, but public disclosure and penalties change that calculation,” Ihnes said.


A representative of the health plans said the industry was providing quality care.

“Plans are committed to ensuring our members have access to the health care they need every day.  We have long recognized that the administrative side of health care coverage can take valuable time away from patient care, which is why plans have been working to streamline processes both at the health plan level and in doctors’ offices,” said Patrick Johnston, the president and CEO of the California Association of Health Plans.

“California health plans remain dedicated to these efforts and will continue to work to make our system more efficient and effective to help prevent errors, reduce costs and ensure resources are devoted to patient care,” he said.

According to the DMHC statement, the plans violated the minimum legal threshold of paying 95 percent of their claims correctly. 

“The audits found that not only did the plan not pay claims accurately, but the second-chance process of getting paid was also often flawed. Five of seven plans were found to violate provider dispute resolution procedures, which is the method that providers must use to protest an underpayment or claims denial and get a corrected payment. This unfairly puts the burden on the provider to fight for payment, either within the plan, through the DMHC or through the courts.”

“It’s good the DMHC is using its existing authority to require prompt, fair payment of claims, and that the new federal health law will provide more tools for the overall oversight over insurers,” said Anthony Wright, executive director, Health Access California, the statewide health care consumer advocacy coalition.

Want to see more stories like this? Sign up for The Roundup, the free daily newsletter about California politics from the editors of Capitol Weekly. Stay up to date on the news you need to know.

Sign up below, then look for a confirmation email in your inbox.


Support for Capitol Weekly is Provided by: