Friday, November 09, 2007

Coverage? What Coverage?

Just think how good the bottom line would look if we didn't pay any claims. LATimes (11.09.07):
"One of the state's largest health insurers set goals and paid bonuses based in part on how many individual policyholders were dropped and how much money was saved.

Woodland Hills-based Health Net Inc. avoided paying $35.5 million in medical expenses by rescinding about 1,600 policies between 2000 and 2006."

Health insurer tied bonuses to dropping sick policyholders

"During that period, it paid its senior analyst in charge of cancellations more than $20,000 in bonuses based in part on her meeting or exceeding annual targets for revoking policies, documents disclosed Thursday showed."

Hooray for Barb! In 2002, Health Net set Barbara Fowler's goal at "15 cancellations a month. She exceeded that, rescinding 275 policies that year -- a monthly average of 22.9."

Double hooray for Barb!! "Her supervisor described 2003 as a 'banner year' for Fowler because the company avoided about '$6 million in unnecessary health care expenses' through her rescission of 301 policies -- one more than her performance goal."

Triple hooray for Barb!!! "In 2005, her goal was to save Health Net at least $6.5 million. Through nearly 300 rescissions, Fowler ended up saving an estimated $7 million, prompting her supervisor to write: 'Barbara's successful execution of her job responsibilities have been vital to the profitability' of individual and family policies."

Though California law "forbids insurance companies from tying any compensation for claims reviewers to their claims decisions", Health Net's lawyer "told the arbitrator in his opening argument Thursday that the law did not apply to the insurer in the case because Fowler was an underwriter -- not a claims reviewer."

So there.

And anyway, it's been a tough month, what with the lawsuits and all.

Speaking of lawsuits, here's an interesting little tidbit from EdgarOnline (03.01.07):

"On August 9, 2005, plaintiffs filed a motion with the District Court seeking sanctions against us for a variety of alleged misconduct, discovery abuses and fraud on the District Court. The District Court held twelve days of hearings on plaintiffs' sanctions motion between October 2005 and March 2006.

During the course of the hearings, and in their post-hearings submissions, plaintiffs also alleged that some of Health Net's witnesses engaged in perjury and obstruction of justice."

HEALTH NET INC - HNT Annual Report (10-K) Item 3. Legal Proceedings.

The Court was not amused. "On December 6, 2006, the District Court issued an opinion and order finding that Health Net's conduct was sanctionable."

In a word, given the number and types of sanctions the Court imposed, the conclusion would be that Health Net was rather naughty, to say the least. How naughty? Considering it was ordered to pay plaintiffs' attorneys' fees, Health Net must have been very, very naughty.

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