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30 janvier, 2008 14:23

By Adam Tanner

SAN FRANCISCO (Reuters) - California's insurance regulators said on Tuesday they will seek fines of more than $1 billion from UnitedHealth Group Inc and audit the handling of claims by the state's top eight health insurers.

California's Department of Insurance said it is seeking penalties of up to $1.3 billion from UnitedHealth related to the handling of medical claims by its PacifiCare unit.

The department found 133,000 potential violations related to payment for medical care claims, which could result in fines of up to $10,000 each.

"We think these violations have been willful in many cases," Steve Poizner, the state's insurance commissioner, said at a press conference in San Francisco.

The commission said it audited 1.1 million claims and found a violation rate of more than 10 percent.

If the alleged violations are found to be willful, the state can fine the company up to $10,000 per incident. Unwillful violations have a maximum fine of $5,000.

"It's the sheer number of violations that disturbs me. The entire system of paying claims seems to have broken down for this company," Poizner said.

The state's Department of Managed Health Care also has been investigating the matter and is levying a fine of $3.5 million. The department's director, Cindy Ehnes, said the company has agreed to pay that fine.

The two agencies launched a joint investigation into PacifiCare's claim payments in 2007 following a spike in consumer complaints after it was acquired by UnitedHealth in late 2005.

"We have already taken, and continue to take, aggressive steps to address the operational issues raised by the departments and improve operational performance and service to stakeholders in California," UnitedHealth said in a statement.

"The vast majority of the issues raised by the departments relate to provider services, many of which we have addressed, and we continue to work diligently to resolve the remaining issues," the company said.

UnitedHealth said that the issues, for the most part, have no direct impact on PacifiCare of California members and that they do not relate to United Healthcare's California health plans or UnitedHealth Group's Medicare plans.

Goldman Sachs analyst Matthew Borsch called the development disappointing but not surprising.

"The market is by now well aware of the execution and customer service issues resulting from the integration of multiple large-scale acquisitions (aggravated in some instances by overly aggressive cost cutting)," Borsch said.

UnitedHealth has faced regulatory sanctions in a number of U.S. states related to the issue and lost a "significant" number of customers, he said.

Shares of UnitedHealth were down 2.5 percent, or $1.28, to $50.72 in trading on the New York Stock Exchange.

(Additional reporting by Lisa Baertlein in Los Angeles, editing by Phil Berlowitz)