PacifiCare Unit Under Federal Investigation for Possible Overbilling

PacifiCare Health Systems Inc., one of California’s biggest health insurers, said Friday that the Justice Department is investigating whether one of its health plans overbilled the health-insurance program for federal government employees.

The investigation focuses on billings for 1990-94 of the TakeCare health-maintenance organization, which PacifiCare acquired in 1997 with its $2.2-billion purchase of FHP International Corp. Santa Ana-based PacifiCare said it didn’t intentionally take any actions that would violate the law.

PacifiCare has contracts with the government to provide health insurance to federal employees and others under the federal employee health-benefits program. The company said the Office of Personnel Management, which runs the benefits programs, audits HMOs every three to five years to ensure the insurers’ premiums are following the program’s rules.

PacifiCare revealed the investigation in its quarterly 10-Q filing with the Securities and Exchange Commission. The Santa Ana-based company said it is negotiating with the Justice Department to “settle the matter amicably.”

The company also said that the Office of Personnel Management’s inspector general office has asked to see documents related to contracts from 1990 through 1997 between the government office and health plans that were part of FHP. PacifiCare said it is cooperating with the request.

Neither Justice Department nor Office of Personnel Management spokesmen were available to comment.

PacifiCare paid $9 million in June to the Justice Department to settle claims of overpayment by the federal employees program to the company’s Oklahoma HMO.

Shares of PacifiCare closed up 31 cents at $51.06 on Nasdaq.