DMHC Fines Health Net, Kaiser $82,500

The California Department of Managed Health Care (DMHC) has fined Woodland Hills-based Health Net $55,000 and Oakland-based Kaiser Foundation Health Plan $27,500 for canceling enrollees coverage without allowing for proper grace periods.

According to correspondence from the DMHC, in fivee instances between 2012 and 2014, Health Net cancelled enrollee coverage without an appropriate notice of a grace period. In three cases, enrollments were cancelled retroactively. In one case, an enrollee's coverage was cancelled because Health Net mishandled premium payments.

The DMHC also found that Health Net had violated provisions of the Knox-Keene Act by not moving forward with the formal grievance process after an enrollee had lodged a complaint with the agency.

In the case of Kaiser, the agency found four instances in 2012 and 2013 where enrollees had their coverage canceled or were warned of cancellations without notification of a grace period, or were cancelled prematurely after a grace period notification. 

In one case, a cancellation occurred after Kaiser had applied a payment to the wrong enrollee's account.

Both insurers agreed to corrective plans, which included revisions to template letters and other documents that notify enrollees. Health Net also agreed to changes to its computer system to ensure premium payments are posted in a timely manner, while Kaiser agreed to additional training of relevant employees on issues pertaining to the modifications of letters that would be sent out to enrollees.