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TAKING ON HEALTH NET FOR ALLEGATIONS OF INSURANCE BAD FAITH

On September 17, 2018, our firm took over representing two out of many drug and alcohol treatment centers who allege they were taken advantage of by Health Net in being falsely denied claims for treatment being provided to recovering addicts. After passage of the Affordable Care Act, substance abuse treatment became an essential health benefit required to be included in individual health plans. Health Net began to offer better benefits for such coverage than its rivals and committed to paying reimbursement at a rate of 75% of the billable amount. At some point, however, in 2015 and 2016, Health Net began denying all claims across the board from any and all substance abuse treatment facilities. Health Net began to deny all claims as suspicion of fraud, and swept all such claims into the Special Investigation Unit and demanded burdensome amounts of records to justify payment.

Even though Health Net would initially provide preliminary authorization for such claims, which would then result in the facilities accepting the patients and beginning treatment with the understanding that their treatment would be reimbursed at the 75% billable rate, Health Net then began denying all claims en masse under the guise of suspected fraud. Curiously, however, this all came at a time when Health Net was being purchased by Centene for $6.3 billion, which has resulted in the suspicion that Health Net was simply trying to make itself appear more profitable on paper during the acquisition by Centene. Eventually, Health Net began to remove treatment facilities out of the SIU, but then implemented a policy to only pay reimbursement at the Medicare rate of 8% of the billable amount. Sadly, this has resulted in many facilities being forced out of business and turning their drug addicted patients away without any further meaningful hope for treatment.

While Health Net continues to deny it engaged in any wrongdoing, it appears the California Department of Insurance for one disagrees with Health Net’s position. The CDI has pursued enforcement actions against Health Net, and in so doing has alleged that Health Net engaged in “unfair or deceptive” business practices by failing to settle provider claims fairly in which its liability “had become reasonably clear.”

For more information and a more detailed summary of the history of these issues, feel free to read the LA Times Article from December 6, 2017, by Michael Hiltzik, by clicking HERE.

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