Health Net worker got bonus for canceling policies

The Associated Press
Article Launched: 11/09/2007 05:31:28 AM PST

LOS ANGELES—Health Net, Inc., one of California's largest health insurers, rewarded an analyst for canceling policies and saving it millions of dollars on medical reimbursements, it was reported Friday.

The company avoided paying about $35.5 million in medical expenses by revoking about 1,600 policies between 2000 and 2006, the Los Angeles Times said.

During that period, the Woodland Hills-based insurer paid its senior analyst in charge of cancellations more than $20,000 in bonuses—based in part, the Times said, on meeting or exceeding the annual company goals for revoking policies.

Most major health insurers review—and sometimes cancel—the policies of clients who submit large medical claims. However, it is against state law for an insurer to link the compensation of claims reviewers to their decisions.

"We are going to take a hard and close look at this case," said Byron Tucker, spokesman for state Insurance Commissioner Steve Poizner.

The Health Net information was contained in documents ordered disclosed Thursday at an arbitration hearing in a lawsuit.

Patsy Bates, a 51-year-old Gardena hairdresser, is suing Health Net for $6 million because it revoked her policy in January 2004 while she was undergoing chemotherapy for breast cancer.

Bates said she was left with nearly $200,000 in medical bills and had to delay the chemotherapy for four months until a charity program paid for the treatment.

Bates' lawyer, William Shernoff, said Thursday that Health Net's behavior was "cruel and reprehensible.

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Health Net contended it pulled her policy because Bates failed to disclose a heart problem and lied about her true weight when she applied.

"The case was rescinded based on inaccurate information on the individual's application," Health Net spokesman Brad Kieffer said.

On Thursday, the arbitrator in the case ruled in favor of a Times motion to open the hearing and release the court documents. They showed that Health Net's senior analyst in charge of reviewing recissions—as cancellations are called—rescinded 275 policies in 2002.

She exceeded the company's goal of 15 cancellations a month with an average of nearly 23 policies.

In 2005, documents showed, the analyst saved the company an estimated $7 million by rescinding nearly 300 policies.

She received annual bonuses ranging from $1,654 to $6,310.

Health Net's attorney, William Helvestine, said no more than $276 of that bonus in any year was based on cancellations.

At Thursday's hearing, Helvestine also argued that the California law did not apply to the analyst.

Blue Cross of California and Blue Shield of California said they do not have any policies linking employee performance reviews to rescission levels.

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Information from: Los Angeles Times, http://www.latimes.com