Health Net Settles Bad Faith Class Action Lawsuits for $255M

Health Net Inc. has reached a settlement over three bad faith class action insurance lawsuits which alleged that the insurer under-reimbursed members due to a faulty computer database program. Health Net will pay approximately $215 million to more than two million members and will spend another $40 million on updating its business practices.

The settlement

According to news reports, although Health Net did not admit any wrongdoing, it agreed to settle the three class action lawsuits that stemmed from under reimbursing members while using the database created by Ingenix, Inc. That company is a subsidiary of United Health, who has also been accused of under-reimbursing its members. Many have alleged that the database is used by insurers to purposefully miscalculate reimbursements.

Health Net was charged with numerous violations in the class action lawsuits by members, including violating ERISA (the federal Employee Retirement Income Security Act), New Jersey’s employer health plan law and RICO (the federal Racketeer Influenced and Corrupt Organizations Act).

Less than consumer friendly business practices

Health Net seems to be in the news on a regular basis as of late due to the company’s less than consumer friendly business practices. For example, in the past year:

  • Los Angeles City Attorney Rocky Delgadillo filed a lawsuit against the company alleging that it engaged in unlawful, unfair and fraudulent business and advertising practices, purposefully used false and misleading marketing in an effort to gain more members and knowingly collected applicants’ medical histories using intentionally misleading forms that called for applicants to make educated medical judgments.
  • Health Net was ordered to pay $9 million by a private arbitration judge after it canceled a cancer patient’s coverage while she was in the middle of receiving chemotherapy treatments.
  • The California Department of Managed Health Care fined Health Net $1 million for lying to the Department about the existence of an employee bonus program created to “find ways” to rescind insurance policies – a bad faith practice that is strictly against the law.

As you can see, the company’s reputation for honesty is a bit tarnished. If you’ve been denied valid insurance benefits or have had your policy rescinded by Health Net, contact an experienced attorney whose practice focuses in the area of bad faith insurance litigation. Consultations to discuss your situation are free, without obligation and are strictly confidential. To contact an attorney, please click here. We may be able to help.

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