State Fines Insurer Over Anti-Fraud Unit

State insurance regulators took action against two California companies, saying the insurers failed to do enough to combat fraud. Sutter Preferred Health & Life Insurance Co. of Sacramento agreed to pay a $40,000 fine and participate in consumer education programs after the California Department of Insurance found the insurer had not maintained its special investigative unit, a fraud-fighting program required by 1994 state law. The agreement requires Sutter to refurbish its unit or risk being banned from operating in California for up to 60 days. In a separate case, Insurance Commissioner Chuck Quackenbush will hold a hearing today to determine whether Los Angeles-based Maxicare Health Plans Inc. should be sanctioned for a similar failure to maintain a fraud unit. Maxicare executives could not be reached for comment.

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