NY Bars UnitedHealth from Taking On New HMO Customers

June 12, 2006 (PLANSPONSOR.com) - The New York State Department of Health has placed an enrollment ban on one sector of UnitedHealth Group's New York operations, claiming that the provider failed to pay service providers or file financial cost reports on time.

Business Insurance reports that the Minnesota-based health care provider has about 130,000 members in New York, and will now be prevented from accepting new customers for its HMO Medicaid and commercial HMO products.

A spokesman for the Department said that the company had some “issues with disclosure,” according to Business Insurance. The Department has also set a June 19 deadline for UnitedHealth to submit a corrective plan, and a September 24 deadline to return to compliance.

UnitedHealth has recently been under fire from the Securities and Exchange Commission for a stock options back dating scandal involving a $1.6 billion award for the company’s CEO, which could force the company to restate its earning by as much $286 million (See UnitedHealth Under Fire for Stock Options ).

A group of five public pension funds has also filed a suit against the health care giant over the back dating of options, and has asked a federal court to prevent William McGuire and Stephen Hemsley, the current CEO and COO, respectively, from exercising their backdated stock options until the lawsuit is resolved (See Public Pension Funds Sue UnitedHealth over Stock Option Grants ).