UnitedHealth Reaches Accord With 36 States On Claims Problems

By VANESSA FUHRMANS

Wall Street Journal

Friday, September 7, 2007

UnitedHealth Group agreed to pay as much as $20 million as part of a settlement with 36 states to resolve problems with the insurer's claims-paying systems.

As part of the settlement, United Healthcare, the company's biggest health-insurance division, also agreed to implement a three-year "process improvement" plan requiring it to submit quarterly reports and meet annual benchmarks toward reducing claims-payment errors, speeding payments and handling complaints and appeals better. If these aren't met, the company could pay as much as $20 million more in fines.

State regulators began hammering out the joint settlement with the health-insurance giant in 2005 but say the company pursued talks more vigorously after an options-backdating scandal led to a management shakeup at UnitedHealth late last year.

The agreement breaks new ground in the health-insurance industry, said Kenneth Burdick, chief executive of the United Healthcare division, in that it "establishes an efficient, transparent framework for working collaboratively with states using objective performance measurement standards." Regulators say the joint settlement talks began after several states said they saw an unusual number of problems at UnitedHealth in resolving complaints or problems that regulators had brought to its attention.

It isn't uncommon for health insurers to be warned or fined occasionally for mishandling claims payments, but "the big concern was they [UnitedHealth] didn't seem to have the oversight or controls to fix them," said David Neustadt, a spokesman for the New York State Insurance Department, one of the state agencies that led the negotiations.

A UnitedHealth spokesman said the company moved several years ago to a more centralized national approach to resolving claims-paying problems that, unintentionally, slowed fixes in some locales. He acknowledged that some problems occurred when UnitedHealth converted some of its acquisitions in recent years to its main claims-paying process.

Write to Vanessa Fuhrmans at vanessa.fuhrmans@wsj.com