UnitedHealth Group will pay a $1 million fine related to allegations that it violated restrictions placed on its 2008 acquisition of Sierra Health Services, the Nevada attorney general has announced.
Because of competitive concerns, UnitedHealth was permitted to acquire Las Vegas-based Sierra provided that it didn't acquire Fiserve Nevada, which administered the healthcare benefits of many Nevada firms.
However, that same year UnitedHealth acquired the parent company, Fiserve Health, including Fiserve Nevada and its third party administration business.
"UnitedHealth Group was permitted to acquire its local competitor Sierra," explained Catherine Cortez Masto, the state attorney general, in a press statement. "But the United/Sierra transaction was subject to many strict conditions. One condition was that United could not acquire another local company, Fiserv Nevada, given our competitive concerns in 2008.
The Nevada Attorney General required assurance that UnitedHealth Group would not acquire or merge with Fiserv Nevada, and placed additional restrictions on joint venture activity, which were reflected in the final approval of UnitedHealth's acquisition of the Sierra Health Services.
"Based on investigating United's compliance with this condition, we have concluded United failed to deliver on its promises to us regarding Fiserv Nevada," said Masto.
According to the Nevada attorneys general office on Friday, UnitedHealth Group engaged in the following conduct which allegedly violated the court-approved judgment of its acquisition of Sierra Health Services:
- In 2008, United acquired, through a series of assignments, all but one of Fiserv Nevada's active customers and exerted near total control on all of these customers before the assignments occurred, which confused Fiserv Nevada's customers;
- United acquired or controlled all of Fiserv Nevada's employees;
- United acquired virtually all of Fiserv Nevada's other assets, including Fiserv Nevada's office space, equipment, and data;
- As a result of these efforts, Fiserv Nevada ceased to do business, as demonstrated by Fiserv Nevada surrendering its license to perform third party administration of insurance in Nevada.
Masto said that "although United denies it acquired Fiserv Nevada as prohibited by the judgment, we feel its actions as reflected in internal company documents demonstrate a violation. We are also seeking court approval for Judgment amendments to tighten up its monitoring mechanisms and hence deter possible future non-compliance."
In addition to paying the $1 million fine, UnitedHealth Group agreed to these provisions:
- The fine's proceeds shall be provided to Nevada agencies or charitable organizations dedicated to improving the quality of or access to healthcare in Nevada;
- Payment of attorneys' fees and costs related to investigating the Fiserv Nevada activity (approximately $125,000 as of December 2010);
- Notification of proposed acquisitions by UnitedHealth Group which significantly involve Nevada healthcare markets; and
- Modifications of UnitedHealth Group's internal policies to protect the confidential data belonging to its Nevada-based customers previously with Fiserv Nevada, of which non-compliance can be deemed a judgment violation.
On Monday UnitedHealth Group issued this statement saying it was "pleased" the matter was resolved. "While we disagree with the allegations because UnitedHealth Group did not acquire an interest in, or engage in a joint venture with Fiserv Nevada, we felt it was important to reach a mutual agreement on this issue so we can move forward with our positive working relationship with the Nevada Attorney General's Office and continue to focus our efforts on providing quality service to our Nevada customers."
Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
