Lawsuits Unhealthy for Health Net Profits

Expenses related to three class action lawsuits contributed to Health Net Inc. posting a net loss for the third quarter. The Woodland Hills-based health benefits provider reported a net loss of $103.8 million, or a loss of $0.93 per diluted share, on revenues of $3.6 billion for the quarter ending Sept. 30. For the same period in 2006, the company reported net income of $90.9 million, or $0.76 per diluted share, on revenues of $3.2 billion. The three lawsuits filed in 2001 in U.S. District Court in New Jersey related to Health Net’s out-of-network commercial claims payment practices for the period between 1995 and July 2007. The settlement cost the company $296.8 million in pre-tax dollars, or $216 million after-tax. “Given the excellent future opportunities we see in our markets, we decided to act now to put these legal and other matters behind us so that we can move forward without these issues distracting us from the important work ahead,” said Jay Gellert, Health Net’s chief executive officer.