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As UnitedHealth Group has grown this decade into a national insurance colossus, the company has repeatedly failed a basic job: paying patients’ medical bills correctly or on time.

Since 2000, the Minnetonka-based company, an insurer of 70 million Americans, has been sanctioned in nine states  for paying claims slowly, shortchanging doctors, hospitals or patients or poorly handling their complaints and appeals, according to a Star Tribune review of regulatory records.

The payment problems related to an array of medical care, from emergency room visits to specialist referrals to oral surgery on children.

After getting faulty information last May from United HealthCare, Mandarin Cheung-Yueh  of Scottsdale, Ariz., spent five months resolving $1,310 in medical bills. “I would have given up if the dollar amount had been smaller,” she said.

UnitedHealth executives told investors last week that it had lost customers and damaged its relationships with physicians because of poor service. They blamed many problems on the company’s rapid growth and said the company will do better.

Yet its chronic difficulties paying medical bills have long frustrated insurance regulators, who enforce laws on how and when claims must be paid. UnitedHealth has paid record penalties for mishandling payments in six states  since 2004, including a $4.4 million fine in Texas last month.

In August, UnitedHealth signed an unprecedented agreement with 37 states to fix the problems over three years.

The foul-ups have happened from New York to Nebraska to California — almost always linked to UnitedHealth computer systems that process medical bills. With a large insurer, even a small error rate frustrates thousands of providers or patients whose appeals can turn into voice-mail and paperwork ordeals.

“What makes me angry is that people don’t fight these things. They think they have to pay,” said Katie Sailors  of Omaha, who complained to state regulators in 2004 after United­Health’s computers incorrectly rejected her son’s surgery-related bill — six times. “You automatically assume the health insurance company is doing right by you.”

Though UnitedHealth, like most insurers, pays the majority of bills correctly, chronic problems on a portion of its claims surfaced in state after state.

“There were times when the fixes would work for a short period of time and then there would be some drift,” said Lou Felice, a deputy chief in the New York Insurance Department. “A particular state would go talk to United, bring them in and settle a problem, but somehow that settlement didn’t get exported and it would crop up someplace else.”

Foul-ups and profits

As regulators uncovered problems with UnitedHealth’s payment practices and customer service, company profits soared to an estimated $4.7 billion this year, up fivefold since 2000.

Top executives were showered with stock options, and longtime leader Dr. William McGuire  became a billionaire on paper. He resigned as chief executive in 2006 after revelations of alleged stock-option backdating. On Thursday he agreed to pay a $7 million fine to the Securities and Exchange Commission and forfeit an additional $420 million in options and benefits. He did not admit wrongdoing and retains options worth an estimated $850 million.

UnitedHealth has acquired 70 companies, more than a third of them health plans, since 2000 and now insures or manages health benefits for 70 million people. Along the way, the company says it invested in the most advanced technology in the industry, part of its declared mission to improve health care.

Its technology hasn’t improved things for Dr. George Schoedinger , an orthopedic surgeon who is part of a specialty clinic in St. Louis. For years, he said, he and the clinic had trouble getting reimbursed by UnitedHealth for patient care. At one point the insurer owed him $600,000. He and the clinic sued United Healthcare of the Midwest in 2004.

U.S. District Judge Stephen Limbaugh  of Missouri, ruling against the insurer in November 2006, declared its claims processing systems “flawed in many ways, denying, reducing, and improperly processing claims on a regular basis. And despite innumerable requests, United was unwilling to remedy the underlying errors in its systems.” 

After the verdict, the payment troubles continued, Schoedinger said. So he filed a second lawsuit against UnitedHealth in May.“These people can never get it right, which says to me that they just plain lie,” he said in an interview.