UnitedHealth Group Sues California's Insurance Commissioner Over $173M Fine

UnitedHealth Group has sued California's Insurance Commissioner concerning a $173.6 million fine the insurer was issued in relation to its acquisition of Cypress, Calif.- based PacifiCare in 2005, according to a Los Angeles Times report.

In 2010, the state of California imposed a $10 billion fine against UnitedHealth Group after state regulators claimed the insurer repeatedly mismanaged claims and failed to pay physicians what they were owed after the company bought PacifiCare, another health insurance company, in 2005.

In 2013, an administrative law judge dismissed much of California's case against UnitedHealth Group and said the insurer should have to pay no more than $11.5 million.

In June, California Insurance Commissioner Dave Jones filed a 220-page decision rejecting the administrative law judge's ruling. Mr. Jones then imposed a $173.6 million penalty on the insurer and ordered UnitedHealth Group to pay the fine no later than July 22, according to the report.

"This ruling threatens to paralyze the healthcare system in the state, resulting in more costs and bureaucracy for Californians," said Stephen Scheneman, president of UnitedHealth Group's PacifiCare unit, in the report.

UnitedHealth Group filed a lawsuit in an attempt to overturn the penalty. The insurer claims the insurance commissioner abused his power when he imposed the fine.

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