|California Insurers Deny 21 Percent Of Claims, Drawing State Probe
More than 1 of every 5 requests for medical claims for
insured patients, even when recommended by a patient’s physician,
is rejected by California’s largest private insurers, according
to data released by the California Nurses Association/National Nurses
Organizing Committee (CNA/NNOC).
Researchers analyzed data reported by the insurers to
the California Department of Managed Care and found that from 2002
through June 30, 2009, six of the largest insurers operating in
California rejected 47.7 million, or 22 percent, of all claims for
The findings have led to a statewide probe by state Attorney General Edmund G. Brown, Jr. as to how insurers pay claims.
"These high denial rates suggest a system that is
dysfunctional, and the public is entitled to know whether wrongful
business practices are involved," he said.
Brown’s deputies are pouring over HMO records and
conducting interviews with individuals knowledgeable about HMO claims
Leading the way in claims denials was PacifiCare, 40
percent in the first half of last year, followed by CIGNA’s 33
"The reality for patients today is a daily, cold-hearted
rejection of desperately needed medical care by the nation’s
biggest and wealthiest insurance companies simply because they
don’t want to pay for it," said Deborah Burger, RN, CNA/NNOC
"Every claim that is denied represents a real patient
enduring pain and suffering. Every denial has real, sometimes fatal
consequences," she concluded.
PacifCare Life Facing Charges of Mishandling Fees
An administrative law judge is hearing arguments to
determine if PacifiCare Life and Health Insurance Co. (PCLHI) violated
California law by mishandling fees and claims continues. A decision is
not expected until at least March.
In 2008, Commissioner of the California Department of
Insurance Steven Poizner charged PacifiCare with thousands of
violations of the California Insurance Code based on the
insurer’s alleged failure to properly process claims from
physicians, failure to meet its payment obligations on a timely basis,
and a host of other improper claims paying practices.
The potential penalties are enormous – $5,000 per
each violation and double that if the violations are found to be
willful, said Darrel Ng, insurance department spokesman.
"The charges against PacifiCare are very serious," said
Adam Cole, the department’s general counsel, who heads the
The alleged violations came on the heels of
PacifiCare’s acquisition by United Health Group in 2008, now the
largest health insurance company in the United States.
The insurance department has also started a follow-up
market conduct examination of PacifiCare, following an initial market
conduct examination; covering the period of June 23, 2006 to May 31,
2007, that disclosed the thousands of violations that served as the
basis of the accusation.
Last year Insurance Commissioner Steve Poizner
introduced regulations to prevent the practice of unfair rescissions in
the individual health insurance industry. These regulations marked
California’s first-ever regulatory steps to clarify rescission
laws, preventing the industry practice of unfairly rescinding health
Addresses: California Nurses Association/National Nurses
Organizing Committee, 2000 Franklin Street, Oakland, CA 94612; (510)
273-2200, www.calnurses.org, www.calnurses.org/nnoc. PacifiCare of California, P.O. Box 30968, Salt Lake City, UT 84130-0968; (800) 624-8822, www.pacificare.com.