New York State

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RELEASE

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James J. Wrynn    Superintendent of Insurance    25 Beaver Street  New York, N.Y. 10004

ISSUED 4/29/2010 FOR IMMEDIATE RELEASE

MANAGED HEALTH, INC. FINED $1 MILLION FOR VIOLATIONS RELATING TO THE MEDICARE ADVANTAGE PROGRAM

HMO Failed to Properly License its Sales Agents, Timely Adjudicate and Pay Claims

Managed Health, Inc. (MHI), a health maintenance organization (HMO), and the New York State Insurance Department have agreed to a settlement, including a fine of $1 million, for infractions relating to MHI’s failure to properly license its sales agents in regard to its Medicare Advantage business and to timely adjudicate and pay claims related to its commercial policies, Insurance Superintendent James J. Wrynn announced today.

The violations were uncovered during an examination conducted by the Department covering the period from 2002 through 2006.

“The Medicare Advantage program serves a vulnerable population, and we need to make sure that individuals selling these products on behalf of insurers are properly licensed and appointed,” Superintendent Wrynn said.

MHI’s violations included failure to ensure that its employees who earned a sales commission obtained the requisite license, failure to ensure that it paid commissions to only licensed agents, failure to file appointment letters for agents, and failure to file termination notices for agents. Most of these violations related to MHI’s Medicare Advantage business.

The Department also found that MHI violated New York’s “Prompt Pay Law” in relation to its commercial business by failing to adjudicate certain health care claims within 45 days of receipt, failing to deny certain health care claims or request additional information about such claims within thirty days of receipt of the claim, and failing to pay interest or incorrectly paying interest on claims that were paid after 45 days of receipt, as required by statute. The Insurance Department found approximately 1,600 such violations occurred in 2006.

MHI has implemented changes in management and oversight of the HMO’s agents’ licensing process and agreed to take all additional steps necessary to remediate past problems and prevent the recurrence of similar violations in the future.

“While the monetary penalty is reflective of the serious and systemic nature of MHI’s practices, I am encouraged by the company’s level of commitment in addressing the Department’s findings and working to improve its performance going forward,” said Wrynn.

MHI is to take all additional steps necessary to prevent the recurrence of similar violations. Specifically, MHI agreed to develop and submit a plan to the Department for ensuring that it pays commissions only to licensed agents, to update its files to include a copy of each appointed agent’s valid current license, and to file appointment letters and termination notices of agents with the Department. Also, MHI agreed to review its claims adjudication procedures and, to the extent not otherwise already submitted to the Department, develop and submit a plan for improving compliance with the Prompt Pay Law.

MHI is a subsidiary of HealthFirst, Inc. It serves the five boroughs of New York City and Nassau and Suffolk Counties in its commercial business, and Bronx, Kings, New York and Queens Counties in its Medicare business.

This settlement resulted from a joint effort of the Insurance Department’s Health Bureau, Consumer Services Bureau and Office of General Counsel.

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