A Busy January at the DMHC
California’s Health Care Regulator Starts the Year Off Right, Protecting Consumers and Holding Insurance Companies Accountable for Violating the Law
The mission of the California Department of Managed Health Care (DMHC) is to protect the healthcare rights of Californians. Consumers can file complaints with the DMHC, and if the agency finds wrongdoing, it can enforce the laws through administrative penalties and other actions designed to make insurance companies comply with the law.
The DMHC has started off 2025 with consumers in mind, initiating 24 enforcement actions in January against health plans like Anthem, Blue Shield, Health Net and others. Learn more about how the DMHC is holding these insurance companies accountable, and if you have been wronged by your insurer, contact Gianelli & Morris to speak with our team of experienced and successful California insurance bad faith lawyers.
California Physicians’ Service d.b.a. Blue Shield of California
A minor enrollee diagnosed with a behavioral health disorder received behavioral health services from an out-of-network provider which was authorized by the plan’s Mental Health Service Administrator (the minor was enrolled in a PPO, which covers out-of-network services). Nevertheless, the claims were denied based on lack of authorization. Apparently, the enrollee had submitted the claims to the Plan rather than the MHSA.
Law Violated: Failure to establish and maintain a department-approved enrollee grievance system under Health and Safety Code 1368(a)(1)
Penalty: $90,000
California Physicians’ Service d.b.a. Blue Shield of California
The enrollee purchased a medical device and submitted a claim for reimbursement, which Blue Shield denied. The policyholder filed a grievance but the insurer upheld its denial on the grounds that the plan does not cover equipment where the cost to rent the device exceeds the purchase price. However, the Plan does cover Durable Medical Equipment benefits when the equipment no longer meets the patient’s clinical needs. Since it turns out that the device in question was a replacement for a non-functional device, the insurer agreed to cover the cost of the new device. Blue Shield’s improper denial of the grievance cost it $16,000 in administrative penalties from DMHC.
Law Violated: Failure to resolve grievance within 30 days, failure to establish and maintain grievance system under Health and Safety Code 1368(a)(1)
Penalty: $16,000
California Physicians’ Service d.b.a. Blue Shield of California
A patient enrolled in Blue Shield’s Gold 80 Trio HMO plan received emergency treatment for an injury at a hospital. The ER physician clearly stated in discharge notes that the enrollee should follow up with her primary care physician (PCP) and an orthopedic specialist in the following couple of days. Blue Shield told the policyholder that she needed to get the specialist referral from her PCP or an in-network urgent care center, which was nearly an hour away, a distance unmanageable by the policyholder due to her injury. Blue Shield failed to offer a viable solution that would allow the patient to receive the care she needed in a timely manner.
Law Violated: Failure to offer an urgent care appointment not requiring prior authorization within 48 hours of the request for an appointment. Health and Safety Code 1386(b)(1), California Code of Regulations, title 28, section 1300.67.2.2, subdivision (c)(5)(A).
Penalty: $50,000
UnitedHealthcare Benefits Plan of California
A policyholder filed a grievance regarding two claims processed by the insurer. In its grievance resolution, the insurer agreed to process one of the claims yet made no mention of the other claim. Months later, it still had not reprocessed even the one claim it agreed to reprocess. After the enrollee filed a complaint with DMHC and the Department got involved, the insurer admitted that it incorrectly closed the grievance without adjusting the claim it agreed should be reprocessed and without addressing the other claim at all. These violations were grounds for disciplinary action against the insurer, which DMHC implemented by issuing a $20,000 fine.
Law Violated: Failure to establish and maintain a department-approved enrollee grievance system under Health and Safety Code 1368(a)(1)
Penalty: $20,000
UHC of California d.b.a. UnitedHealthcare of California
A minor who was receiving mental health services at an in-network residential treatment center was denied further treatment on the grounds that such services were not medically necessary. In denying services, the administrator made conclusory statements without citing any specific clinical facts or explaining how the minor’s condition was applied to the criteria the administrator ostensibly used in deciding future services were not needed.
Law Violated: Failure to timely provide medical records to IMR organization. Health and Safety Code 1374.34, California Code of Regulations, title 28, section 1300.74.30. Failure to include a clear and concise explanation of the reasons for the plan’s decision, HSC 1367.01(h)(4), 1368(a)(5)
Penalty: $70,000
UHC of California d.b.a. UnitedHealthcare of California
This action involved a dispute between the health plan and the medical provider. The plan was found to have violated California law by failing to timely issue a written determination to a provider dispute within 45 working days as required.
Law Violated: California Code of Regulations, title 28, section 1300.71.38(f)
Penalty: $7,500
Cease and Desist Orders
Not every DMHC enforcement action ends in a monetary fine. Several health plans were handed a Cease and Desist Order in January for legal violations such as failure to timely reimburse, contest, or deny a claim (California Health & Safety Code1371(a)(1)) and other failures. Under the order, the insurance companies are prohibited from adding any enrollees to the risk arrangement with a particular network (Meritage Medical Network). Health insurers subject to the order include Cigna HealthCare of California, Inc.; Health Net of California, Inc. California Physicians’ Service d.b.a. Blue Shield of California; UHC of California d.b.a. UnitedHealthcare of California; and Meritage Health Plan.
Victim of Insurance Bad Faith in California? Call Gianelli & Morris Today!
If your insurance company is violating the law by unreasonably denying your claim for services or reimbursement, you have options. The California insurance bad faith lawyers at Gianelli & Morris can help you explore those options and recommend a solution that ensures you receive appropriate care and compensation for any harm done. Contact us today for a free consultation.
