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Health Net, Inc.

McCoy/Wachtel/Scharfman ERISA Lawsuits

Date: 11/01/2007 (Date of Settlement Announcement)

Misconduct Type: Health

Enforcement Agency: Non-Governmental

Contracting Party: None

Court Type: Civil

Amount: $255,000,000

Disposition: Settlement

Synopsis: Three separate lawsuits were filed in New Jersey federal court by beneficiaries in POS plans administered by Health Net. The lawsuits claimed Health Net violated the Employee Retirement Income Security Act (“ERISA”) by systematically under-reimbursing out-of-network service providers, requiring beneficiaries to pay unreasonably high out-of-pocket costs. In November 2007, it was reported that Health Net settled the three lawsuits. In July 2008, the court gave final approval to the settlement. Under the agreement, Health Net did not admit liability and will pay $215 million and make $40 million worth of improvements in its business practices.