PacifiCare temporarily halts issuing $120 million in dividends amid fight with California insurance regulators

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The fight goes on.

Insurer PacifiCare has temporarily halted its effort to pay $120 million in dividends to subsidiaries of its parent company while it resolves mismanagement allegations in California that could bring multimillion-dollar fines.

The Cypress-based insurer is fighting allegations by the California Department of Insurance that it violated state law nearly 1 million times from 2006 to 2008 by mismanaging medical records, losing patient documents and failing to pay doctors what they were owed. The case is being heard by an administrative law judge in Oakland.

On Thursday, PacifiCare delayed its plans with the Indiana Department of Insurance; the company is domiciled in Indiana. But the insurer insisted that it hasn’t given up.

“We have temporarily put the request in Indiana on hold until the matter in California is resolved successfully,” spokeswoman Cheryl Randolph said. “We fully intend to refile the request.”

PacifiCare acted three days after California Insurance Commissioner Steve Poizner ordered the company not to pay the dividends. Poizner called Thursday’s decision a “critical victory,” saying the money will be available if PacifiCare faces penalties in the ongoing case.

But PacifiCare said it was “puzzled” by Poizner’s comments, noting that it is still contesting his order in California. The company can appeal Tuesday.

“We continue to disagree with the commissioner’s attempt to use the dividend process to try to gain leverage in a separate case about administrative issues that have long since been addressed,” Randolph said.

-- Duke Helfand