Former Health Net executive sues over prompt pay

The HMO employee alleges wrongful termination based on her refusal to comply with the Arizona insurer's delaying tactics.

By Cheryl Jackson, AMNews staff. Aug. 27, 2001.

A former executive at one of Arizona's largest health insurers claims that the plan deliberately delays paying claims to physicians and kept her from changing the practice.

Health Net of Arizona would not move to pay physicians until 20 days after receiving a claim, Sally Fernandez alleges in a lawsuit filed Aug. 1 against the plan and its parent company, Woodland Hills, Calif.-based Health Net Inc., for wrongful termination. The suit, filed in Pima County Superior Court, is a rare case of an executive going on record with claims of a health plan purposefully delaying claims payments.

The allegations are without merit, said Lisa Haines, a spokeswoman for Health Net Inc.

Health Net of Arizona fired Fernandez, then vice president of marketing and public affairs and interim vice president of operations in Tucson, Ariz., July 9 in a layoff of 139 of its 714 employees. The layoff came after the division reported losses of $65 million over two years.

The operations job, which Fernandez took in April, included responsibility for provider claims processing and other duties.

Fernandez said 62,000 of 300,000 unprocessed claims the Arizona plan had on hand were more than 30 days old when she took the operations position and that she moved to streamline claims processing.

State law requires insurers to approve or deny a clean claim within 30 days of receipt.

The company, Haines said, has about 60 claims processors and pays about 12,000 claims each business day.

According to the lawsuit, when Fernandez attempted to eliminate a "20-day lag" policy under which approved "claims were held for 20 days without reasonable justification before payment," state and corporate leaders told her she could not implement such a plan because it would create a financial burden on Health Net of Arizona. [...]