Health Net agrees to Settale a Claim by New Jersey Customers for $41 M
27 08 08 - 12:03
HMO agrees to pay $41 million for shortchanging N.J. customers
by Susan K. Livio/The Star-Ledger
The health maintenance organization Health Net has paid $41 million in claims and fines for short-changing 88,000 customers in New Jersey, under an agreement announced today by Banking and Insurance Commissioner Steven Goldman.
The payments include a record $13 million fine, stemming from a state investigation into Health Net and its predecessors, First Option Health Plan of New Jersey and Physicians Health Services of New Jersey.
The total also includes $14 million to customers whose claims had been underpaid; $12 million in interest and $2 million in other fees. The claims were for "out-of-network" services provided between 1996 and 2006, Goldman said in a statement.
"Health Net dramatically underpaid claims to New Jerseyans to reimburse them for out-of-network health care services," Goldman said. "I'm pleased that we were able to obtain the return of this money to Health Net's New Jersey subscribers, together with interest, since this is what Health Net promised to pay but had not. The fine represents an appropriate penalty for this improper business practice."
The checks, ranging from a "few dollars to a couple thousand dollars," went out in July and August to 50,000 current or former policy owners, benefiting 88,000 people including family members, Alice Ferreira said, spokesperson for Health Net's northeast regional office in Shelton, Conn.
"We're pleased this is fully resolved. Today's news lets folks know we have worked cooperatively with the department and we have made restitution," she said.
Health Net cooperated with the investigation and waived its right to a hearing, Goldman said.
A complaint from the public first alerted the state to the problem six years ago. At that time, Health Net agreed to reimburse 4,700 customers $800,000 for short-changing reimbursements from July 2001 and October 2002.
Three years later, the department reopened the investigation and determined the HMO and its predecessors underpaid for medical claims from 1996 to 2005, and for dental, mental health and chiropractor care between 1999 and 2006, according to a statement from Goldman's office.
"We have made the members whole, and corrected any of the claims issues that led to this," Ferreira said.
Health Net serves 120,000 policyholders throughout the state, she added. They include people who receive Medicaid, the state and federally-funded insurance program for the poor, and FamilyCare, New Jersey's free and subsidized health program for working poor families.
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