California’s seven largest health insurers were issued subpoenas to investigate possible illegal activity regarding premium rate increases and delays in claims payments.

Jerry Brown

California Attorney General Jerry Brown announced the subpoenas as part of an ongoing investigation by his office, seeking financial records and other documents from Aetna Health, Anthem Blue Cross, CIGNA, Health Net, Blue Shield of California, Kaiser Permanente and PacifiCare.

Brown said the newest part of his investigation will explore member and medical-provider complaints on payment delays, denials and reductions, proper notification of proposed premium increases and alternative policies for members who are facing premium increases and if enrollees are denied entry into those alternative plans due to pre-existing conditions.

The probe also will look at how much each plan spends on health care versus costs for administration, marketing and profits. Each plan was asked to provide detailed data on how they spend premium dollars and how they review claims and decide reimbursement for doctors and hospitals.

“We have been looking at these companies for a number of months and are very concerned that some of them are unjustly raising premiums and denying payment of legitimate claims,” Brown said in a statement. “Not only are the rate increases devastating to Californians strapped by the economy, but in some cases, they are possibly illegal.”

AG vows to stop any violations

The subpoenas, issued Feb. 25 by Brown’s office, cover pay-for-service health plans that reimburse doctors and hospitals for services performed rather than a health maintenance organization approach. The companies have 30 days to submit the requested documents.

“Our best attorneys are going to get to the bottom of this, and where we find violations of California’s unfair business laws, we intend to stop them,” Brown said.

Marc Brown, a spokesman for Kaiser Permanente, told IFAwebnews.com that the insurer “just received” Brown’s request late Feb. 25 and has not had sufficient time to review it, “but we certainly intend to cooperate fully.”

Christopher Curran, a CIGNA spokesman, said the insurer had yet to receive Brown’s subpoena, but “if we receive one we will respond to his office as appropriate.” Anthem responded that it had also yet to get a subpoena from Brown, but is “prepared to review and respond appropriately when we do. ”

Aetna and Health Net told IFAwebnews.com that they both plan to cooperate with the attorney general’s request.

In September 2009, Brown’s office questioned the same seven insurers regarding HMO practices of reviewing and paying insurance claims submitted by doctors, hospitals and other medical providers. That investigation came as a result of reports that the state’s five largest insurers were denying nearly 40% of all insurance claims.

The investigation also follows the recent request by Anthem to raise rates in California by as much as 39%, a request they delayed under pressure from California insurance regulators and U.S. Department of Health and Human Services Secretary Kathleen Sebelius.