Troubles continue for Oxford Health Plans, the one-time high-flying HMO whose stock has lost three quarters of its value since October. New York's insurance department fined the company $3 million for violating regulations, including the HMO's failure to pay claims on time. Oxford agreed to pay another $500,000 in restitution to customers, physicians and other providers.
Oxford violated state laws by issuing contracts that had not been state-approved, regulators said. It used contracts with rates other than those on file with the department, and wrongly denied valid claims.
New York regulators also forced Oxford to establish internal procedures to generate reliable data for claims, premiums and expenses; evaluate and beef up senior management, and hire an outside consultant to evaluate its information systems, internal controls and management reporting.
Oxford is looking for a CEO to replace William Sullivan, 34, who took the helm last summer. The HMO also appointed Albert Koch, known as a turnaround specialist, as temporary chief financial officer. Former CFO Andrew Cassidy left Oxford shortly after it reported a $78 million third-quarter loss, causing its stock to plunge.
Connecticut's insurance department will audit the company either this or next month, in response to a local medical group's concerns about Oxford's financial status. And the HMO faces at least six lawsuits from stockholders who argue that the company failed to disclose all it knew about its deteriorating financial situation.
Oxford covers 1.9 million people in New York, New Jersey, Pennsylvania, Connecticut, New Hampshire, Florida and Illinois.