DCBS Media Release
January 5, 1996
Health insurer fined $20,000 for improper claims denials
The Insurance Division of the Oregon Department of Consumer & Business Services has issued a $20,000 civil penalty against PacifiCare because of improper claims denials. A routine market conduct examination and subsequent investigation by the State agency uncovered a consistent pattern of denying payment of emergency room claims without a proper investigation. PacifiCare subsequently agreed to pay the penalty and to improve its claims handling process.
Oregon law requires insurance companies to conduct a reasonable investigation based on all available information before denying a claim. The Insurance Division examined company records for 1992 through 1994, and those records indicated that PacifiCare initially denied 4,978 emergency room claims based only on a billing statement from the emergency room facility. While the Insurance Division did not conclude that all of these denials were necessarily unwarranted, it did find that the company failed to interview consumers whose claims were denied or take other actions that would constitute a reasonable investigation before denial.
Oregon law also prohibits denials of claims where liability has become reasonably clear. PacifiCare was found to have violated this law in several instances, including cases where policyholders were referred to emergency rooms by trained medical personnel.
In one case, a PacifiCare policyholder collapsed in a restaurant. An emergency vehicle was summoned and the emergency medical technicians determined the consumer should be transported to an emergency room. This claim was denied by PacifiCare as not being an emergency.
"Undergoing emergency medical care is traumatic for consumers," said Oregon Insurance Commissioner Kerry Barnett. "The situation only gets worse if their medical bills are not properly paid."
PacifiCare also was cited for numerous deficiencies in its record-keeping practices. The company was unable to provide files for some groups denied health insurance, as well as records covering some consumer complaints against the company. These documents had been requested by State officials in order to reconstruct events and their dates.
The Insurance Division plans to re-examine the company in 1996 to determine whether the violations have been corrected.