UnitedHealth settles Nebraska claims allegations

LINCOLN, Neb.--UnitedHealth Group Inc. has settled allegations that several of its subsidiaries violated Nebraska's insurance laws relating to appeals, grievances and claims payments for medical services.

The Minnetonka, Minn.-based health insurer has agreed to pay an administrative fine of $650,000 as well as the costs incurred by the Nebraska Department of Insurance related to the prosecution of the action.

The insurer also has agreed to provide oversight of its claims payment and grievance processes and fully cooperate with the department in resolving future consumer complaints, including meeting quarterly with department officials to review any consumer complaints.

The agreement applies to several UnitedHealth subsidiaries operating in Nebraska, where the company has the second-largest share of the health insurance market, according to the Department of Insurance.

The majority of the allegations stemmed from a 10-month market conduct exam conducted by the department in 2003 and 2004, as well as from certain consumer complaints previously investigated by the department.

In a statement, the insurer said it was pleased to reach an agreement with the department and has implemented new systems to improve its claims processing and its appeals efficiency and accuracy by automating the organization and workflow of the claims process. About one-third of the alleged violations were related to administrative issues that were corrected immediately, the company said in its statement.

In the consent order, the company denied violating the law, but acknowledged that errors were made in implementing certain technological efficiencies. The consent order includes no findings of intentional misconduct or any general business practices in violation of the law, the company noted.

Meanwhile, UnitedHealth and Las Vegas-based Sierra Health Services Inc. received a request for additional information from the antitrust division of the U.S. Department of Justice regarding the proposed merger between the two companies, according to a filing with the U.S. Securities and Exchange Commission. The information request, also known as a "second request," was issued under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

The act imposes a 30-day waiting period before the deal can close. The issuing of the second request will extend the waiting period until 30 days after UnitedHealth and Sierra have substantially complied with the request for additional information, unless the period is extended voluntarily by the parties or terminated sooner by the DOJ, according to the SEC filing.

"We are working diligently to gather all the information the DOJ requires to make its decision," a UnitedHealth spokesman said in a statement. "We continue to expect the transaction to be completed by the end of the fourth quarter."