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DMHC fines L.A. Care Health Plan $300,000 for deceptive enrollment tactics

The California Department of Managed Health Care (DMHC) announced taking enforcement action against Local Initiative Health Authority for Los Angeles County (L.A. Care Health Plan) for misleading 21 of the plan’s enrollees during the enrollment process. The plan has agreed to pay the fine and implement corrective actions, including monthly monitoring of sales staff to ensure misconduct does not recur in the future.

“Health plans are required to be honest with their enrollees when advertising and soliciting,” said DMHC Director Mary Watanabe. “The Department’s investigation of L.A. Care Health Plan uncovered sales representatives using untrue and misleading statements to target vulnerable consumers in clear violation of the law. The DMHC is requiring L.A. Care Health Plan to implement important corrective actions to protect consumers and prevent this from happening again.”

The DMHC opened an enforcement investigation into the plan following a whistleblower complaint in 2020, alleging L.A. Care Health Plan representatives used misrepresentation, deception, and other tactics during the enrollment process. Through the Department’s investigation, L.A. Care Health Plan reported a total of 282 grievances, including at least 21 substantiated grievances, during the period of December 2017 through June 2021, related to untrue or misleading statements made by the plan’s sales representatives.

Several of the grievances involved L.A. Care Health Plan’s sales representative representing that name brand prescriptions would be covered, when they were not, or reviewing only copays for generic medications while providing name brand prescription information. As a result of the untrue or misleading statements, some enrollees were left without coverage or were required to suddenly pay copays after they were told they would not have to.

In response to the DMHC’s enforcement investigation, L.A. Care Health Plan provided information and documentation reflecting that the plan was taking corrective action that involved disciplining problematic sales representatives, outreaching to impacted enrollees to redress any harm or negative impact caused by the plan’s sales representatives, and implementing auditing and monitoring tools to ensure employee compliance with applicable laws and regulations.

In addition to paying the $300,000 fine, L.A. Care Health Plan has agreed to implement a number of additional corrective actions, including revising the plan’s sales incentive program to focus on quality and compliance, revising policies and procedures for call scripts, conducting staff trainings and coaching with sales and marketing staff, increased call monitoring, reviewing marketing methods including call conduct, establishing internal audit processes and other measures to comply with all applicable laws and regulations.

The DMHC encourages health plan enrollees experiencing issues with their health plan, including enrollment and coverage concerns, to file a grievance or appeal with their health plan. If the enrollee does not agree with their health plan’s response or the plan takes more than 30 days to fix the problem for non-urgent issues, the DMHC Help Center can work with the enrollee and health plan to resolve the issue. The health plan enrollee can file a complaint or apply for an Independent Medical Review (IMR) with the DMHC Help Center at www.HealthHelp.ca.gov or 1-888-466-2219. If a health plan enrollee is experiencing an urgent issue, they should contact the DMHC Help Center immediately. Help on urgent matters is available 24 hours a day, seven days a week.

This article was released by the Office of Assemblyman Tri Ta.

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