Health Net punished for lying about contract cancellation bonuses
Victoria Colliver
San Francisco Chronicle
State health regulators fined Health Net Inc. $1 million Thursday for lying to investigators about paying employees bonuses based on the number of contracts they canceled after those policyholders got sick.
The penalty was the first levied on a health insurer for withholding information about incentives given to its employees.
Health Net, along with other major health insurers, is being investigated for combing through applications of members after they have filed claims to find mistakes or omissions that would justify revoking policies. Insurers say they resort to rescinding policies only when members lie about their health histories, but consumers say the questionnaires often are vague and misleading.
As part of the investigation, state regulators asked Health Net officials on two separate occasions whether the company gave financial bonuses to its employees for rescinding policies. State law prohibits tying compensation to claims decisions. Both times, plan officials denied doing so.
"The health plans say they have to rely on applicants being truthful and fully disclosing their medical conditions. And if they aren't truthful, there are very hard consequences," said Cindy Ehnes, head of the state Department of Managed Health Care. "As a regulator, I have to rely on that same truthfulness and full disclosure by the companies we regulate."
November 16, 2007 at 12:00 AM | Permalink | Blog Reactions
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