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Friday, Jun 9, 2023

Health Net Settles Lawsuit, Reports Increase in Net Income

Health Net announced it has reached a settlement with about 900,000 physicians to end class action lawsuits brought against the company starting in 1999. The company will pay $40 million to general settlement funds and an expected award of up to $20 million for plaintiffs’ legal fees. “This will allow us to continue to enhance our working relationship with the physicians who serve our members. It will put a potentially contentious matter behind us. As part of the settlement, Health Net has already begun to implement a number of new business practices that will improve health plan/physician relationships and contribute to improvements in our operations,” said Jay Gellert, president and chief executive officer of Health Net. Health Net agreed to disclose more information about certain claims payment practices, pay electronic claims in 15 days, create a review board to deal with billing disputes and establish an independent physician advisory committee among other measures. The company will record an approximately $66 million pretax charge against earnings in the first quarter for the settlement amount, legal expenses and other charges. The company will spend $80 million over the next four years to implement business practice changes. Health Net also announced its first quarter results, reporting a net income of $21.3 million, or $0.19 per diluted share, compared with $15 million, or $0.13 per diluted share in the first quarter of 2004. First quarter revenues decreased slightly to $2.39 billion from $2.4 billion in the same period last year. The company expects second quarter earnings between $0.05 and $0.55 per diluted share, while analysts were expected earnings of $0.56 per diluted share. Health Net share were down $1.24, or 0.36 percent, to $32.94 at the close of trading.

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