Archive for December 28th, 2010

PacificCare Halts $120 Million Dividend

Tuesday, December 28th, 2010

December 27, 2010

PacifiCare Life & Health Insurance Co. put a proposed $120 million dividend payment to its parent company on hold under pressure from California insurance regulators seeking potential billions in fines.

After California Insurance Commissioner Steve Poizner ordered PacifiCare to halt the payment, the division of UnitedHealth Group (NYSE: UNH) notified Indiana regulators that it will not go through with a $120 million payment to two United subsidiaries. Poizner is seeking up to nearly $10 billion in fines from UnitedHealth for millions of alleged violations dating back to its acquisition of Indiana-based PacifiCare in December 2005 (BestWire, Sept. 9, 2010).

“While the investigation into PacifiCare is ongoing, the blocking of this payment is a critical victory because it keeps the money where it would be available to satisfy any order that is issued and pay accordingly the fines that go along with such an order,” Poizner said in a statement.

UnitedHealth — which previously said the size of the fine sought “has no basis in reality” — intends to successfully resolve the legal matter, which remains pending before a California administrative law judge. “We are puzzled by the commissioner’s statement because, as he is well aware, we are actively contesting his decision on the PacifiCare dividend through the process established by his own department. We continue to disagree with the commissioner’s attempt to use the dividend process to try to gain leverage in a separate case about administrative issues that have long since been addressed,” spokeswoman Cheryl Randolph said.