PacifiCare could face record fines of up to $9.9 billion for allegedly mismanaging medical claims, patient documents, and failing to pay doctors what they were owed.
The California Department of Insurance claims the company violated state law nearly 1 million times from 2006 to 2008 after it was purchased by UnitedHealth Group, Inc., according to court filings cited in the Los Angeles Times.
Regulators investigated numerous complaints following the two companys' merger. Customers claimed PacifiCare lost documents in their system, denied claims for covered procedures and then ignored requests for help. Doctors complained their claims were not being paid correctly, resulting in lower reimbursements, the Times reported.
According to the Times:
State regulators investigated and, in early 2008, announced that they had uncovered 133,000 violations of state law with maximum penalties of $1.33 billion. The matter grew to nearly 1 million violations as the case unfolded this year in the administrative law court.
A second regulator, the state Department of Managed Health Care, fined PacifiCare $2 million over allegations that it improperly denied medical claims for HMO policyholders. The carrier paid the penalty but did not admit any liability.
The state is seeking fines as high as $10,000 for 992,936 alleged violations which could total $9.92 billion. The amount could become the largest ever against a U.S. insurer, the Times reported.
PacifiCare and United Health deny the state's allegations saying the case involves mostly administrative errors that did little harm to customers and the company insists it pays claims in a timely and accurate manor.
A company spokesman told the Times they are committed to maintaining "a high level of service to physicians, hospitals and health plan members."