California subpoenas big health insurers’ financial records

The California state attorney general’s office said Thursday that it had subpoenaed financial records of California’s seven largest health insurance companies as part of an investigation into whether they illegally raised customer premiums and denied payment of legitimate claims.

Prosecutors said they sought documents from Anthem Blue Cross, Aetna Health, Blue Shield of California, Cigna, Health Net, Kaiser Permanente and PacifiCare.

The subpoenas -- of financial records and other documents -- cover health plans that reimburse doctors and hospitals for their services.

Also Thursday, the state Assembly’s Rules Committee authorized a subpoena to force Anthem to hand over documents related to proposed rate hikes of as much as 39% for California customers’ individual policies.

The dual legal efforts are under way as Anthem and other health insurers nationwide face stepped-up scrutiny over rate hikes by regulators, members of Congress and the Obama administration. President Obama is seeking greater federal authority over insurance-premium increases as part of his national healthcare overhaul.

The investigation into the denial of insurance claims submitted by doctors, hospitals and other providers began in September. California Atty. Gen. Jerry Brown said his office served subpoenas to the same companies in January over the practices of their HMOs.

“We have been looking at these companies for a number of months and are very concerned that some of them are unjustly raising premiums and denying payment of legitimate claims,” Brown said in a statement. “Not only are the rate increases devastating to Californians strapped by the economy, but in some cases, they are possibly illegal.”

An Anthem spokeswoman said Thursday that the Woodland Hills-based company, California’s largest for-profit insurer, had not received its subpoena.

Cigna, Health Net, Kaiser and PacifiCare also said they had not received their subpoenas.

Anjanette Coplin of Aetna said: “We have been and will continue cooperating” with the attorney general’s office.

The head of a trade group representing health insurers, including the seven subpoenaed Thursday, said insurers abide by state rules for setting premiums and paying claims.

“The people of California and the Legislature and governors in the past have assured Californians of regulation of health insurance,” said Patrick Johnston, president of the California Assn. of Health Plans.

“We understand that elected officials will raise questions about important issues, including healthcare,” he said. “If they ask questions, we will attempt to answer them.”

The attorney general said he would try to determine whether Anthem’s proposed rate hikes of as much as 39% are legal under California’s unfair-competition law.

The probe also will examine whether the other insurers are planning similar rate hikes and how much they spend on healthcare, marketing and administration, Brown’s office said. It also asked the insurers to provide detailed information about how they review claims. Meanwhile, state officials said the subpoena authorized Thursday by the Assembly Rules Committee would seek information related to Anthem’s rate hikes and compensation for its top 10 executives.

The subpoena, which requires documents to be delivered by March 8, was approved on a party-line vote, with six Democrats in favor and four Republicans opposed.

The action was a rarity at the Capitol. Lawmakers last used subpoena power in 2000 during an investigation into corruption in the office of then-Insurance Commissioner Chuck Quackenbush.

“It’s important to take action to send a message that we are going to use subpoenas to make people comply with Assembly committees,” said Rules Committee Chairman Ted Lieu (D-Torrance). “It’s been used far too little in the past.”

The move to subpoena Anthem’s records was pressed by Assembly Health Committee Chairman Dave Jones (D-Sacramento), who said it was needed because company officials failed to provide all documents related its rate hikes during a hearing by his committee on Tuesday.

“It’s unfortunate,” he said, that Anthem Blue Cross “played games with our original request, and we were forced to produce this subpoena.”