Class Action Settlements: Health Net
Health Net is one of the nation's largest publicly traded heath care companies, with its subsidiaries providing health care benefits to 6.6 million people in all 50 states. It also offers managed health care products, including prescription drugs, and has been one of the more popular companies in terms of providing quality care.
Health Net has not been without controversy. A class action suit was filed against the company on November 15, 2007, in California on behalf of 800 former policyholders. The suit stemmed from allegations that the company was unlawfully canceling health insurance policies and rewarding employees who did so. The suit charged that since 2001 Health Net had rescinded the health care policies of 1,600 people in California, resulting in $35.5 million in savings over that time. The suit was filed after Health Net was found to have lied to state investigators about its internal practices of setting goals for its employees for policy cancellations.
On February 12, 2009, the suit was settled for a sum up to $14 million with an average payment to class claimants of $7,836. The company also had to donate $500,000 to charities, pay a $2 million fine to the Los Angeles City Attorney's Office and pay more than $40 million to resolve regulatory litigation issues over its policy rescission practices.
Three other class action suits were filed against Health Net in federal court in New Jersey over its alleged violations of the Employment Retirement Income Security Act, New Jersey's health plan laws and the U.S. Racketeer Influenced and Corrupt Organizations Act. The suit covered more than 2 million people in several states and essentially charged the company with underpaying Health Net Insurance Plan members for insurance claims for out-of-network medical treatment as far back as 1997.
The three class actions were settled on July 24, 2008, for $255 million. Of that amount, $215 million was to be distributed to eligible class members and $40 million to making business practice changes.
Another class action against Health Net, Aetna, Anthem Blue Cross and Blue Shield, Coventry, PacifiCare, United Healthcare and WellPoint Health was brought on behalf of 950,000 physicians alleging that these providers had denied reimbursements for medical services and illegally rejected claims for necessary services.
Health Net agreed to pay $40 million to active and retired physicians and $80 million to improve its system to process reimbursement claims in a settlement reached on October 10, 2007.
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