California regulatory actions shadow United's pursuit of Sierra

Opponents of the merger, including the AMA, hope recent accusations and fines against the health plan can quash the deal.

By Emily Berry, AMNews staff. Feb. 25, 2008.

In light of California regulators' smackdown of UnitedHealth Group over how the insurer handled its PacifiCare acquisition in that state, medical, governmental and union officials appeared together to renew their call that regulators reject the company's $2.6 billion bid to acquire Sierra Health Services in Nevada.

At a news conference in Las Vegas Feb. 7, AMA's Immediate Past President William G. Plested III, MD, warned that if UnitedHealth Group's bid to merge with Sierra goes through, physicians and patients in Nevada would face the same kind of mismanagement that has plagued PacifiCare's members and doctors in California, where he is a surgeon.

"It is overwhelmingly clear that United's behavior reflects an underlying philosophy that it is more cost-effective to violate state law and risk a possible fine than to comply with laws designed to protect patients and employers," he said.

Others at the news conference included Clark County (Nevada) Commission Chair Rory Reid, Nevada State Assembly Speaker Barbara Buckley, Nevada State Medical Assn. Executive Director Larry Matheis and, representing the Service Employees International Union, nurse Fredo Serrano.

Prompted by the recent allegations in California against United's subsidiary PacifiCare, which merged with United in 2005, Reid joined others in pleading with regulators to "learn from history" and reject a proposed deal, announced in March 2007, to merge United and Las Vegas-based Sierra.

The news conference occurred about a week after California's Dept. of Managed Health Care fined United $3.5 million, and the state's Dept. of Insurance accused the company of 133,000 violations of state law and regulations, ranging from failure to pay doctors on time to failing to tell members how to appeal claims decisions. The Dept. of Insurance could fine United up to $1.3 billion.