DMHC Fines Health Net, Aetna $400K

The Department of Managed Health Care has fined Health Net and Aetna a combined $400,000 due to violations of state law.

Woodland Hills-based Health Net was fined $200,000 by the agency in connection with a loss of data connected to a migration project that occurred in 2011. 

Six hard drives containing information on 1.9 million current and former plan enrollees, including 845,000 in California, went missing from Health Net's data facility in Rancho Cordova as a result. 

The DMHC had concluded that the breach represented “reasonable grounds” to conclude that the insurer had violated both federal and California law, specifically the state Civil Code chapter mandating that providers of healthcare services maintain the integrity of their records, and the Business and Professions Code regarding false advertising. Health Net was aware of the breach as early as February 2011, but did not make any formal notifications until about a month afterward.

The fine is part of a settlement between Health Net and the DMHC in order to avoid litigation and administrative hearings. Health Net is not making an admission of breaking state or federal laws. Last July, Health Net settled civil litigation in California Superior Court connected to the breach.

The DMHC also fined Aetna $200,000. That stemmed from its failure to correct defects the department found in a routine examination of the health plan that was published in 2013. Aetna had agreed back in 2010 to correct problems involving its payment of interest on claims paid late to providers and incorrect claims denials.

The fine includes a $50,000 administrative penalty and another $150,000 in fines that had been suspended as part of the 2010 agreement that Aetna would take an appropriate corrective action.