UnitedHealth Inks $13 Million Settlement With States

UnitedHealth Group will pay out $13 million in a settlement with 36 states and the District of Columbia following a probe of the insurer’s claims processing system.

New York will receive $3.7 million, the largest single amount in the settlement, under the agreement announced Thursday with UnitedHealth Group’s biggest insurance business, UnitedHealthcare. The state will receive an additional $320,000 under a separate agreement regarding the insurer’s violations of New York’s prompt-payment statute, claim appeal rules and other regulations.

UnitedHealthcare will take specific steps in response to the New York findings, including reviewing and reprocessing delayed claims payments with applicable interest going back to January 1, 2003.

UnitedHealthcare agreed to implement a national improvement plan that will be in effect through the end of 2010. The five lead states—New York, Iowa, Florida, Connecticut and Arkansas—will jointly monitor UnitedHealthcare’s market practices.

The plan’s benchmarks include claims accuracy and timeliness, appeals review and consumer complaint handling. If UnitedHealthcare doesn’t meet the benchmarks, insurance regulators could impose up to $20 million in additional penalties.

The national investigation “found many errors in claim processing,’’ such as incorrectly applying fee schedules and deductibles, according to the state Department of Insurance. UnitedHealthcare also frequently violated prompt-payment rules, and when notified, the insurer “was generally unable to correct problems” because of “poor controls and oversight.”

The insurer was proactive in working with states on regulatory issues that set national, standardized goals, according to a UnitedHealthcare spokesman. As a national insurer operating across many states, UnitedHealthcare faces a patchwork of claims processing regulations.

“This is about moving forward and using consistent benchmarks,” the spokesman said.

Filed by Barbara Benson of Crain’s New York Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.