UnitedHealth, Insurer Shares Drop on N.Y. Lawsuit

The New York Attorney General's Office said it plans to file suit against Ingenix, its parent UnitedHealth Group, and three additional subsidiaries, as part of an investigation into a "scheme by health insurers to defraud consumers by manipulating reimbursement rates."

Shares of UnitedHealth tumbled about 5 percent on the news.

In addition, New York Attorney General Andrew Cuomo said he has issued 16 subpoenas to health insurance companies, including Aetna , Cigna , and Wellpoint's Empire BlueCross BlueShield.

Shares of those companies fell as well, though none to the same extent as UnitedHealth.

In a news release, Cuomo said a six-month investigation found that Ingenix operates a "defective and manipulated database that most major health insurance companies use to set reimbursement rates for out-of-network medical expenses.

"Further, the investigation found that two subsidiaries of United dramatically under-reimbursed their members for out-of-network medical expenses by using data provided by Ingenix."

"Getting insurance companies to keep their promises and cover medical costs can be hard enough as it is," Cuomo said. "But when insurers like United create convoluted and dishonest systems for determining the rate of reimbursement, real people get stuck with excessive bills and are less likely to seek the care they need."

UnitedHealth said it was in ongoing discussions with Cuomo's office on the issue and would continue to cooperate fully.

"UnitedHealth Group recognizes the excellent health care delivered to patients by the physicians of New York and is committed to fair and appropriate payment for physicians, the state's other health care providers and consumers," UnitedHealth said in a statement.

The subpoenas to health insurers request documents showing how the companies compute reasonable and customary rates, copies of member complaints and appeals, and communications with members and between Ingenix and the insurer on the issue, the New York AG said.

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