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It's one of those rare clashes between regulators and insurers where both sides can claim victory.

UnitedHealthcare said Thursday it has reached a $12 million settlement with 37 states, including Minnesota, over problems with its claims payment system. The settlement could escalate to $20 million if remaining states join in.

It's the first multistate settlement by a health insurance company. As part of the agreement, UnitedHealthcare agreed to embark on a three-year improvement plan that will include quarterly reviews and yearly benchmarks on such criteria as accuracy of claims and timeliness of payments.

If it fails to meet those goals, UnitedHealthcare, part of Minnetonka-based UnitedHealth Group Inc., may have to pay up to $20 million more.

Insurers typically hash out claims disputes with individual state regulators. This agreement is a model for future actions against national companies, said Susan Voss, insurance commissioner in Iowa, one of five states that led the negotiations.

"This is more than writing a check. It's an intensive three-year process," Voss said of the improvement plan. "We're going to be holding their feet to the fire. If I was another major insurer, I'm going to be watching this very carefully."

Kenneth Burdick, chief executive of UnitedHealthcare, said the plan was "forward-thinking" and put regulators and insurers on the same page in terms of performance standards.

New York will receive the biggest chunk -- $4 million, which the state insurance department described as its largest health-related settlement to date.

Minnesota was one of the last states to sign on and will receive $74,500, which will go into the state's general fund. Minnesota has just 22,500 UnitedHealthcare members, mostly residents who work for out-of-state companies.

'A bargain' for the company

The agreement caps three years of talks between UnitedHealthcare and various state regulators and enables the insurer to wipe the slate clean.

For UnitedHealthcare, "it's a bargain," said Sheryl Skolnick, an analyst with CRT Capital Group, describing the settlement amount as about half a day's cash flow for the company.

The embarrassment factor probably is a bigger deal for a company that prides itself on the efficiency of its claims payment system, Skolnick said. "This to me suggests not that they're any worse than anyone else, but that they're not any better than anyone else."

The settlement does not affect any ongoing lawsuits with providers. Still, at least one group greeted Thursday's announcement with mixed feelings.

The scale of the agreement is vindication that UnitedHealthcare's claims-payment problems are systemic rather than sporadic, said Michael Brown, counsel for MediSys Health Network in New York City.

Jamaica Hospital Medical Center and Flushing Hospital Medical Center, both part of MediSys, are suing Oxford Health Plan, a UnitedHealth subsidiary, to stay in its network and alleging, among other things, that Oxford's computer systems are used to defraud members and health care providers.

But the agreement doesn't address past wrongs or offer any restitution to providers, said David Rosen, president and chief executive of MediSys.

"It is a feel-good settlement," Rosen said.