California DMHC Signals Heightened Scrutiny of Health Plan Dispute and Grievance Practices—Key Takeaways for Healthcare Providers

The California Department of Managed Health Care (DMHC) recently announced two significant enforcement actions against major commercial health plans—Health Net of California, Inc. and Anthem Blue Cross—resulting in $450,000 and $15 million penalties, respectively. Although the penalties were assessed against health plans, both actions carry important implications for healthcare providers seeking timely payment, dispute resolution, and fair treatment of grievances involving patient care and billing issues. Together, these actions underscore the DMHC's continued focus on timeliness, process integrity, and accountability in plan handling of provider disputes and enrollee grievances.

In a February 4, 2026 announcement, the DMHC imposed a $450,000 administrative penalty against Health Net of California, Inc. for failing to comply with provider dispute resolution (PDR) timeliness requirements under the Knox‑Keene Act. Following an investigation covering January 2017 through December 2022, DMHC found that Health Net repeatedly failed to timely acknowledge provider disputes within 15 working days and resolve disputes within 45 working days as required by Cal. Code Regs., tit. 28, § 1300.71.38(e)(2) and (f). During certain periods, Health Net failed to meet these deadlines at least 95% of the time, constituting a "demonstrable and unjust payment pattern'' under § 1300.71(a)(8)(R) and (S). In total, DMHC cited 15,368 late dispute resolutions and 19,048 late acknowledgments out of more than 544,000 provider disputes. DMHC emphasized that staffing shortages and operational challenges do not excuse noncompliance and noted that these violations may be considered in future enforcement actions involving the plan.

This came on the heels of a January 30, 2026 assessment of a $15 million penalty against Anthem Blue Cross for persistent and systemic failures in its grievance system. DMHC alleged that these issues spanned more than a decade and persisted despite multiple prior penalties, corrective action plans, and routine surveys. DMHC found that Anthem repeatedly failed to properly identify written and oral expressions of dissatisfaction by patients as grievances, timely acknowledge, consider, and resolve grievances, or include appropriate licensed professionals in quality assurance activities, all in violation of Health & Safety Code §§ 1368 and 1380 and related regulations. These deficiencies affected patient grievances involving delays in care, denials, and balance billing, including cases with serious patient care consequences. As part of the resolution, Anthem agreed to a multi‑year corrective action plan extending through at least 2029, overseen by an independent third‑party auditor with direct reporting obligations to DMHC, underscoring the Department's expectation of sustained, verifiable compliance.

What Providers Should Do Now

These significant enforcement actions suggest the DMHC is focusing its enforcement efforts on health plan compliance with statutory timelines and requirements for dispute resolution with both providers and patients. In light of these enforcement actions, healthcare providers should:

• Track and document plan timeliness failures, including late acknowledgments (beyond 15 working days) and late dispute resolutions (beyond 45 working days) and retain written correspondence demonstrating noncompliance.
• Clearly label and submit payment disputes as formal provider disputes and follow up when plans misclassify disputes or grievances as mere "inquiries,'' a practice DMHC has repeatedly found unlawful. Where delays or misclassification persist—particularly across multiple claims or over defined time periods.
• Consider escalating matters internally within the plan, invoking contractual dispute rights, or filing complaints with the DMHC Help Center, which has served as a key enforcement trigger in both actions.

Providers will benefit when they recognize that systemic plan failures, not just isolated claim issues, are drawing heightened DMHC scrutiny. If your organization would like guidance on how to structure a process for tracking these failures and reporting them to DMHC, our managed care team can help. We partner with revenue cycle teams in all phases of the dispute process, from appeals and grievances to provider complaints to DMHC and formal litigation.

+++

For more information, please contact John Barnes or Leslie Murphy from DWT's healthcare practice group.