News: 2010 Press Release

Insurance Commissioner Steve Poizner today announced that PacifiCare Life & Health Insurance Co. ("PacifiCare") has filed an order with the Indiana Department of Insurance withdrawing its proposed $120 million dividend payment to its parent company, UnitedHealth Group ("United"). The move by PacifiCare comes after Commissioner Poizner issued an order, earlier this week, halting the company from making the dividend payment.

"This is an important development in our ongoing efforts to make sure PacifiCare is held accountable for its actions," Commissioner Poizner said. "While the investigation into PacifiCare is ongoing, the blocking of this payment is a critical victory because it keeps the money where it would be available to satisfy any order that is issued and pay accordingly the fines that go along with such an order."

After UnitedHealth Group purchased PacifiCare Health Systems in 2005 for $8 billion, the Department of Insurance began receiving hundreds of complaints from consumers and doctors regarding improper handling of thousands of claims. An examination resulted in the Department charging PacifiCare with over 130,000 violations of law. Each violation is subject to a penalty of up to $5,000 or $10,000 if the violation was willful.

The company demanded a hearing on the charges, which commenced last December and is still pending before an administrative law judge. As the case has unfolded, the Department has found additional violations. PacifiCare is now charged with nearly 1 million violations, each subject to penalties of up to either $5,000 or $10,000.

PacifiCare gave legal notice last week that it intends to pay $120 million in dividends to two subsidiaries of United. In response, Commissioner Poizner filed his order, noting the possibility that PacifiCare may be found liable for penalties that, in the aggregate, exceed the amount left after the dividend is paid out.

The order had presented PacifiCare with the right to a hearing where it could have protested the freeze on its dividends.