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California fines PacifiCare for 7,000 late claims

PacifiCare Health Systems has reached a settlement with the California Department of Managed Health Care for failing to pay 7,000 insurance claims filed by doctors and hospitals within 45 days as required by state law.

HMOs owed 85 California hospitals nearly $1 billion for more than 645,000 overdue claims.

PacifiCare officials would not disclose the size of the penalties or the interest that must be paid on the claims, saying only that they total "less than $3 million." Advanced news of the state's crackdown on the delinquent payments caused PacifiCare stock to plummet 21 percent, or $8.22 per share, to $30.91 on March 1, 2001, in heavy Nasdaq trading.

"We don't dispute the department's recently stepped-up efforts to address this important issue with us and others in the industry," says Brad A. Bowlus, president and CEO of PacifiCare's Health Plans Division.

Other California insurers may face similar sanctions, says Daniel Zingale, the director of the state's Department of Managed Health Care.

A 2000 California Healthcare Association survey revealed that HMOs owed 85 California hospitals nearly $1 billion for more than 645,000 overdue claims, or claims that were in "accounts receivable" for more than 60 days.

PacifiCare says it has hired 72 claims processors and upgraded its information systems to speed up claims payment.

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