NEW YORK ( TheStreet) -- WellPoint (WLP) shares fell as much as 1.5% Tuesday after the California Insurance Commissioner said late Monday that subsidiary Anthem Blue Cross could be fined $7 million for claims handling irregularities.
Following an investigation into consumer complaints, California Insurance Commissioner Steve Poizner said the insurance department had found more than 700 violations of state's claims handling law.
Wellpoint failed to respond to state requests to hand over certain documents to investigate consumer complaints, according to SNL Financial. Additionally, it misrepresented policy provisions to consumers, SNL Financial said.
Poizner said that if these violations are proven to be willful, Anthem Blue Cross would face a maximum penalty of $10,000 for each violation committed from 2006 through 2009. These fines would not help a company that is already intending to increase rates for its policyholders by up to 39% because it claims it is losing money in California.WellPoint stock is down 1.1% to $58.80 in recent trading. --Reported by Gavin Magor in Jupiter, Fla.