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WellPoint records subpoened in California probe

February 26, 2010

WellPoint Inc., Aetna Inc. and Cigna Corp. are among health-care companies whose financial records have been subpoenaed by the state of California in a probe into rising premiums and denied medical claims.

The rate-setting and claims practices may be illegal, California Attorney General Jerry Brown said in an e-mailed statement, adding that the companies have 30 days to turn over financial and other records covered by the subpoenas. Documents were also demanded from Health Net Inc., Blue Shield of California, Kaiser Permanente and PacifiCare Health Systems Inc.

|The investigation was undertaken in response to reports that California insurance providers deny almost 40 percent of claims, Brown said. The subpoenas cover health plans that reimburse doctors and hospitals for services, and follow a demand Brown made last month for documents covering the same companies’ managed-care plans, or health maintenance organizations, he said.

U.S. Representative Henry Waxman, D-Calif., yesterday claimed that Indianapolis-based WellPoint, the biggest U.S. health insurer by enrollment, sought to raise health-insurance rates in California to boost profits and cover costs ballooned by executive pay and corporate retreats. At a hearing in Washington, Waxman said the company also may have manipulated calculations to justify the proposed 39 percent rate increase for Californians who buy their own policies.

WellPoint paid compensation of at least $1 million apiece to 39 executives in 2008 and spent $27 million over two years on executive getaways, Waxman said, citing documents obtained by his committee.

Kristin Binns, a WellPoint spokeswoman, said in an e-mail that she was trying to verify the company received the subpoenas. If so, WellPoint will review Brown’s request and “respond appropriately,” she said.

WellPoint Chief Executive Officer Angela Braly said at the hearing Wednesday that the company’s proposed rate increase for Californians who buy their own policies was driven by surging costs and a recession that forced healthy people to drop coverage.

Aetna, based in Hartford, Conn., is the third-largest U.S. medical insurer. Cigna, whose shares rose the most among the largest insurers last year, is based in Philadelphia.

Chris Curran, a Cigna spokesman, said the company hasn’t yet received the subpoena and when it does, “we’ll respond to his office as appropriate.”

Aetna Inc. spokesman Fred Laberge didn’t immediately return calls seeking comment after regular business hours.

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