Health Net Agrees To Pay $41M To Settle Charges That It Underpaid Out-of-Network Claims For New Jersey Members

Main Category: Health Insurance / Medical Insurance
Article Date: 28 Aug 2008 - 8:00 PDT

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Health Net has agreed to pay $26 million in restitution and interest and $15 million in fines and other charges to settle allegations that it underpaid out-of-network claims for 88,000 New Jersey members between 1996 and 2005, the New Jersey Department of Banking and Insurance announced Tuesday, the Bergen Record reports. The $26 million payment is in addition to the more than $800,000 that the insurer agreed to pay in 2002 to more than 4,700 state customers for similar underpayments.

As part of the settlement, Health Net will pay the affected members $14 million in total underpaid claims, with an additional $12 million in interest, for out-of network medical services from 1996 through 2005 and dental, mental health and chiropractic services from 1999 through 2006. The settlement also includes $13 million in state fines and charges (Newman, Bergen Record, 8/27). In addition, the penalties include $2 million to cover the cost of the state's 21-month investigation (Bloomberg/Philadelphia Inquirer, 8/27). The reimbursement and penalties agreement is the largest ever administered by the department, department spokesperson Paul Penna said.

Alice Ferreira, a spokesperson for Health Net, said, "There were out-of-network claims that were not paid accurately," adding that the company has modified its reimbursement calculation system. Ferreira said that more than 55,000 reimbursement checks ranging from "a few dollars to several thousand dollars" already have been mailed out in the last two months and that most of the 88,000 members affected have been contacted (Bergen Record, 8/27).

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