Government to Pay Health Net’s Back Claims

Health Net Inc., one of California’s biggest insurers, said it expects profit of $1.55 to $1.58 a share this year after the U.S. government agreed to pay $389 million in back health-care claims. It was expected to earn $1.54 a share, according to analysts. Woodland Hills-based Health Net said it will pay down debt with the settlement from the Defense Department’s health-care program for military families. About $120 million to $130 million of the settlement is owed to vendors, the company said. The money, which Health Net expects to get this week, is due under three contracts. The government had disputed the claims, which occurred after medical costs rose faster than Health Net expected. Some of the claims date back five years, Health Net spokesman David Olson said. The government contracts cover more than 1.5 million military retirees and military families in 11 states and account for about $1.1 billion of Health Net’s $8.8 billion in annual revenue, Olson said. Health Net shares fell 63 cents to close at $24.38 on the New York Stock Exchange.