PacifiCare ordered to not pay $120 million in dividends
California Insurance Commissioner Steve Poizner has ratcheted up the pressure in a long-running dispute with Cypress-based PacifiCare.
Poizner has ordered the health insurer not to pay $120 million in dividends to two subsidiaries of its parent company, saying the money may be needed to cover possible penalties in an administrative case brought by the Department of Insurance.
The department has accused PacifiCare of violating state law nearly 1 million times from 2006 to 2008 by mismanaging medical records, losing patient documents and failing to pay doctors what they were owed.
The violations, each carrying a fine of as much as $10,000, allegedly occurred after PacifiCare was purchased in 2005 by insurance giant UnitedHealth Group Inc., the nation’s largest insurer by revenue, state officials said.
PacifiCare has argued that the state’s case mostly involves administrative errors that did little harm to consumers. The company says that three-quarters of the allegations were related to PacifiCare’s alleged failure in 2007 to inform doctors and patients of their right to appeal coverage decisions. It can appeal Poizner’s order Dec. 21.
Company spokesman Cheryl Randolph said in a statement, “We disagree with the commissioner’s refusal to allow PacifiCare to issue an ordinary dividend, and it’s inappropriate to use this process to try to gain leverage in a separate case about administrative issues that have long since been addressed. We are reviewing the decision and deciding upon our next steps.”
