Insurance carrier Health Net has agreed to pay $40 million to settle a lawsuit brought by the city of San Diego that alleged the company misled consumers regarding the scope of coverage and services within its network.
The settlement stems from a lawsuit filed four years ago that claimed Health Net’s medical and mental health provider directories included inaccurate information, such as providers who no longer contracted with the consumer’s plan or incorrect provider contact information. The complaint alleged Health Net’s directories had an overall 18% error rate, which included an error rate of over 35% for psychiatrists.
The lawsuit also laid similar claims against Kaiser and Molina Healthcare and the cases against those companies remain ongoing.
“Under state law, all health insurance companies that do business in California must provide accurate provider directories, and Health Net is no exception,” California Attorney General Rob Bonta said in a statement. “Today’s settlement will result in industry-leading changes — changes that are long overdue and that stand to benefit Californians.”
As part of the settlement, Health Net will pay $12 million toward California consumer protection law enforcement efforts and $28.5 million to support compliance programs aimed at improving the accuracy of its provider directory. Some of the compliance programs include the creation of an automated process that will regularly update the provider directory, a 24-hour phone line to assist consumers looking for providers, and hiring a consultant to advise the company on how to improve its directory.
“Accurate provider directories are critical for patients seeking care,” San Diego City Attorney Heather Ferbert said. “When insurance companies misrepresent their networks, they create barriers that leave families scrambling and vulnerable patients without access to doctors they were promised. This settlement ensures accountability and puts protections in place to stop Health Net’s misleading practices and give patients access to the care they expect from their health insurance.”
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