updated 9/6/2007 6:39:30 PM ET 2007-09-06T22:39:30

UnitedHealthcare on Thursday settled complaints about its past claims practices, agreeing to pay $12 million in fines to 36 states and the District of Columbia.

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The largest sum, about $4 million, is going to New York, where the health insurer covers roughly 1 million people.

A joint investigation by insurance officials in the states found that the Minnetonka, Minn.-based insurer often applied incorrect fee schedules and deductibles, didn’t promptly pay claims, and was generally unable to correct problems pointed out by regulators, New York state insurance officials said Thursday.

Insurance officials in New York, Arkansas, Connecticut, Florida and Iowa led the settlement negotiations.

The company also agreed to meet benchmarks for improving its claims accuracy and timeliness, appeals and handling of consumer complaints, or face up to $8 million in additional fines.

In May, United reached a similar agreement with Nebraska insurance officials, agreeing to pay a $650,000 fine. The company faced complaints there about delayed decisions, wrong decisions on coverage and giving bad information to consumers.

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