Health Insurance Firms paid employees bonuses for cancelling policies!

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<p>Health Net punished for lying about contract cancellation bonuses
Victoria Colliver, Chronicle Staff Writer</p>

<p>Friday, November 16, 2007</p>

<p>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.</p>

<p>The penalty was the first levied on a health insurer for withholding information about incentives given to its employees. </p>

<p>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. </p>

<p>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.</p>

<p>“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.”</p>

<p>The company’s practices came to light last week when a Southern California judge allowed documents to be made public that showed a Health Net analyst received more than $21,000 in bonuses from 2000 to 2006, based at least partly on meeting or exceeding the company’s rescission goals. Health Net claimed to have saved $35.5 million in “unnecessary” care for rescinding more than 1,000 policies during that time frame, documents showed. </p>

<p>Health Net executives apologized Thursday for “any misunderstanding” with the state regulators. The company, based in Woodland Hills (Los Angeles County), accepted a consent agreement and promised to stop compensation practices linked to rescission.</p>

<p>The documents were submitted in an arbitration hearing involving Patsy Bates, a 51-year-old hairdresser from Gardena (Los Angeles County), who is suing Health Net for $6 million plus punitive damages for canceling her policy after she was diagnosed with breast cancer. The company said she lied about her weight and failed to disclose a heart condition. </p>

<p>Claremont attorney William Shernoff, who is representing Bates, called the fine appropriate. </p>

<p>“If they can mislead the Department of Managed Health Care, can you imagine how misleading they can be to their policyholders?” Shernoff said. The hearing in Rancho Cucamonga (San Bernardino County) is expected to conclude Friday. </p>

<p>State regulators fined WellPoint Inc., the parent of Blue Cross of California, $1.2 million and Kaiser Permanente $325,000 for improperly canceling policies. Investigations continue for Kaiser, Health Net, PacifiCare and Blue Shield of California. </p>

<p>E-mail Victoria Colliver at <a href="mailto:vcolliver@sfchronicle.com">vcolliver@sfchronicle.com</a>. </p>

<p>[Health</a> Net punished for lying about contract cancellation bonuses](<a href=“http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/11/16/BAH7TDB0V.DTL]Health”>http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/11/16/BAH7TDB0V.DTL)</p>

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<p>Big sigh. Healthcare in America…</p>

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<p>Vote with your conscience in 2008.</p>

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<p>Ha ha. What a joke. A million dollar fine. The scumbags at Healthnet couldn’t wait to write that check. They probably were high fiving each other. They write the check, and then they will go back to their business… ripping off patients and doctors and enriching their company. They sit around in a room and brainstorm new ways to steal from their clients and providers. I can’t discuss details but I am part of a group of physicians involved in a lawsuit with them. The officers of that company have the ethics of a slime mold. They would drop health insurance coverage on their mothers if it would make money for them.</p>

<p>And yes, this is the sad state of health care in our country in 2007.</p>

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<p>“company said she lied about her weight and failed to disclose a heart condition”</p>

<p>Yea, yea I know health care companies are the bad guys can’t argue that point but…</p>

<p>"mistakes or omissions "</p>

<p>Did she forget about her heart condition or weight? </p>

<p>Some times the bad guy is not always the only bad guy. </p>

<p>I know I will get jumped on, but really think for a second. You sign off on a document that everything you’ve answered is true to the best of your knowledge… is it? </p>

<p>The only way they would know about her conditions was the MIB where records are stored. So at some time her true weight was listed and her heart condition treated in the past. There was a record.</p>

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<p>^^That’s fine, but for Health Insurance Co’s to pay a BONUS to employees for finding policies to cancel is unethical. That was the reason for the [ puny]fine. Cancelling a policy for fraudulent information withheld is more justifiable.</p>

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<p>Lying about one’s weight? How many of us haven’t? And how big a lie? It’s one thing if you say you weigh 130 and it’s really 230; it’s quite another if you say that you weigh 130 and it’s really 145.</p>

<p>And what “heart condition”? There are some conditions diagnosed that aren’t serious and are easy to forget. For example, I was diagnosed, as were a majority of women, with a mitral valve prolapse. Not a big deal; requires no treatment and no monitoring. Is that what she forgot? </p>

<p>How big a lie or omission does it need to be before it’s fraud?</p>

<p>Remember that this is “what the company said”. Not necessarily the truth.</p>

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<p>“Cancelling a policy for fraudulent information withheld is more justifiable.”</p>

<p>but you see the article and the news called those two things "mistakes or omissions " when really they were something else weren’t they? </p>

<p>What is a can’t win situation here is we do want someone to catch cheaters? In doing so, we get mad at them. </p>

<p>There are billions in healthcare costs going out to fraud every year. No matter who the payer is government or private player, somebody cheats.
The problem is who is the bad guy when somebody gets caught? </p>

<p>When your healthcare provider takes a bit of time to investgate a claim, you get a letter from your doctor or hospital, often citing collection if your bill isn’t paid promptly. You yell at your HR who yells at the broker who yells at the carrier to speed up claims. In many cases it is just easier to raise rates than catch fraud, so many carriers do just that… </p>

<p>How does fraud occur? well done correctly nobody catches it. A phys theraphy company used to tack on a charge for the dixie cup of ice after treatment automatically… the dixie cup cost $7 each, if they actually gave you one. Submit a million claim forms with this $7 charge included in a $250 theraphy treatment and what did you make for a service you didn’t provide? </p>

<p>Or you could be a nationally know medical school w/hospital and have a couple doctors double dip medicare…</p>

<p>We say we want the bad guys caught, but at the same time we get mad when they do. </p>

<p>I have no interests what so ever with healthnet and never heard of them till today, but wouldn’t you think that a better example of mistakes and ommissions could be found? Than someone who lied about her weight and a heart condition? Couldn’t they find someone who had bad handwritting or transposed a number? that’s the best mistake they could find?</p>

<p>While I would like to get mad and shake my fist at the system, I am not going to do it for someone who was pulling a fast one of her own.</p>

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<p>I wonder how they proved she lied about her weight. My weight changes daily! </p>

<p>My H had to fill out a questionaire for insurance recently, and he was pulling out all kinds of receipts and papers, trying to make sure he hadn’t left something off, for fear of losing benefits for lying. This is a guy who is nearly never sick, and seldom goes to a doctor, even when he should. I thought he was being overconscientious. Guess not.</p>

<p>“Lying about a heart condition” could mean everything from having had major surgery, to having her pulse recorded as rapid once.</p>

<p>It seems really wrong to cancel a cancer claim due to completely unrelated issues. Now, if she claimed her weight was much less than it was, and she had a history of heart problems, and then she had a heart attack, the insurance company might have a legitimate complaint.</p>

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<p>“How big a lie or omission does it need to be before it’s fraud?”</p>

<p>material. </p>

<p>A few pounds no, heart condition? why do you assume it’s the same as yours?</p>

<p>I’ve had people tell me they have no heart problems when asked?? </p>

<p>Why? “because I just had a four way bypass. everything’s fixed.” not really…</p>

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<p>“I wonder how they proved she lied about her weight.”</p>

<p>folks if you don’t know all your medical information goes into a libarary of sorts known as the Medical Information Breau (MIB). Just as credit reports contain your credit history, the MIB contains your medical history. Every claim paid by insurance for you ends up there. </p>

<p>When you sign up for coverage, you sign a consent form that allows a carrier to check the mib for information. This is where a rejection may come from. There is a medical record of treatment for a condition in your history. The MIB came about to prevent fraud, just as credit reports do. </p>

<p>Just like credit reports the information in the MIB can be wrong, especially with common names and “junior” situations. You can clear it up much in the same way. </p>

<p>Now I know I’m coming off as a bad guy here by my position. Believe me over the years I have tracked down and corrected many mistakes for clients, but in the same token, I am smart enough not to let a client omit something material, as I know what the outcome will be. Sometimes that costs me business. But, I’d rather not make a dollar than make one and give back 5 later. just me. </p>

<p>I’d rather not be the cheerleader for this company as I don’t know them…they could be bad in so many ways… but in the same token I got a call yesterday from a guy who wants dental insurance immediately, cause he needs a root canal now. I told him I couldn’t help him with that (excluded pre-ex) but heres an application so you can start your coverage for the future… the answer I got back “Why would I need to do that?” </p>

<p>So I have a little sympathy for the situation. nobody wins.</p>

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<p>Wellpoint was raided by federal authorities also. They were also fined for improper Medicare Part C sign up. They were not telling potential enrollees all the needed information.</p>

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<p>well if no one is going to start it, I guess I will: </p>

<p>Should we go to universal healthcare to avoid health insurance companies like this and to save people from getting screwed?</p>

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<p>I’m moving to France!</p>

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<p>“Should we go to universal healthcare to avoid health insurance companies like this and to save people from getting screwed?”</p>

<p>Are you certain that would make things better? How would that stop fraud? It hasn’t so far with the government run programs. </p>

<p>Was the company truly at fault in this situation? They caught someone in a lie, did they honestly do a bad thing? </p>

<p>If you read a story that the company had no internal controls and was mismanaged by not screening properly, would you think they were well run?</p>

<p>As I said for many companies it is far, far easier to just raise rates then to crackdown on the fraud. Mainly because when they do catch somebody cheating, they get blasted. Then if they don’t and it comes out, they get blasted for being lax. </p>

<p>No matter who it is at the end of the day government or private… who ever has to say NO will be the bad guy. </p>

<p>One of the biggest misconceptions of nationalized healthcare is the word “NO” will go away… nope, no matter who it is somebody is going to be told “NO” and it will be deemed unfair and an injustice by somebody. </p>

<p>I actually think the word “NO” will increase when the feds take it over…we just had a state supported initative go to ballot that triples damages to insurance carriers who deny claims, “except” in health care? guess who is about to become a bigger player in our healthcare? guess who doesn’t want to be sued and have triple damages?</p>

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<p>opie ofMaybery2: Just so you know I through out the question, just because I thought that’s where the convo was going to end up.</p>

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<p>“Ha ha. What a joke. A million dollar fine. The scumbags at Healthnet couldn’t wait to write that check. They probably were high fiving each other.”</p>

<p>That’s just what I thought when I saw the headline. This fine isn’t even a slap on the wrist; it’s a minor cost of doing business, like paying the Culligan man who refills the water cooler.</p>

<p>Opie, I think you’re not paying sufficient attention to the fact that this company broke the law. When it comes to this type of fine, it doesn’t matter if the insured’s application was covered with lies from beginning to end. State law says that insurance companies can’t reward their employees for catching those lies, period. Compensation has to be independent of claims decisions. That law should either be enforced with real teeth or it should be repealed.</p>

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<p>

No, the problem is we have a system which rewards and encourages being a bad guy. If a person figures they’ll save a few bucks by lying on their application, they’re a bad guy. If a mom knows that her kids will not be able to get medical insurance for anything which happens to them if she notifies the new company about a condition which may or may not ever cause a problem, and she omits that information - is she a “bad guy?” If a person doesn’t tell the insurer about a heart problem, and they deny her medical coverage for injuries sustained in a car accident which has nothing to do with her heart - who is the “bad guy?”</p>

<p>

Well, it would solve the problem highlighted in this story, wouldn’t it?</p>

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<p>First of all, the plaintiff’s health insurance was canceled when she was diagnosed with breast cancer - which has absolutely nothing to do with heart condition and very little to do with her weight. (At most, excess weight might be a risk factor for cancer - not a direct cause).</p>

<p>So there’s not much “fraud” – it is not as if she signed up for health insurance knowing she wanted gastric bypass surgery. Insurance policies routinely deny care for “pre-existing conditions”, but in this case the purported nondisclosure is an unrelated condition. </p>

<p>But that gets to another issue entirely-- and why we need universal health care. The whole idea of denying someone medical care because they were sick before they got insurance is ridiculous – is this person any less entitled to treatment for her breast cancer because she had a heart condition? For that matter, should she go without medical care for her lifetime for her heart condition (whatever it is) because she can’t buy insurance for a “pre-existing condition”? If your kid has asthma do you want him or her to grow up to be uninsurable – or only able to get medical care by paying monthly premiums that are unaffordable for any young person? </p>

<p>Obviously issues like excess weight and smoking are partly within the control of the patient, and it makes sense for insurance companies to offer incentives such as reduced premiums for those who work to stay healthy – but it is unconscionable to let people go untreated for serious conditions like cancer simply because they can’t afford the treatments – and who can afford the cost of cancer treatment? </p>

<p>If we had universal health care --whether through a single-payer system or a regulated, hybrid system like the one that John Edwards & Hillary Clinton propose – then this wouldn’t be an issue. Health Net could play by the rules, or if they don’t want to pay to treat sick people, they could opt out of the market. </p>

<p>A private system where only healthy people with few risks can be approved for insurance that they can afford is no system at all. It is simply a ripoff.</p>

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<p>Is there a time limit on health insurance and for how long after your application they can go back to find “fraud?” With life insurance, the company has two years to determine fraud, if it has not surfaced in two years, you got away with it.</p>

<p>Seems like it ought to be the same in health insurance, if the mis-stated illness has not caused a problem for 2 years, then how big a problem is it? Ah, but then if I forgot to mention I had breast cancer 5 years ago and it recurs i 5 more years, I should have been paying higher premiums all along the way, so that is tough.</p>

<p>I have an extremely high deductible and avoid doctors whenever I can, but am floored by the rampant waste in CYA testing done by doctors. My FIL has a cancer that was daignosed, had scans & biopsys & it is slow growing, treatment is ONLY for symptoms, if they develop, yet his doc is still doing scans and repeat biopsys, though there is no treatment. The only reason I can come up with for this is to cover himself in case of litigation??? Otherwise, why does it matter? What a waste of money & time & health risks.</p>

<p>Our system is crazy and I hate paying so much for which I receive (and hope to continue to receive) nothing- we are healthy, but we avoid treatment for small things. I hate to pay $100 for a visit for a sore throat!</p>