Health Net Enrolls More Than 6,500 California Employees in State-Certified HCO.

Business Editors & Health/Medical Writers

LOS ANGELES--(BUSINESS WIRE)--Nov. 6, 2002

Health Net, Inc. (NYSE:HNT) today announced that it completed the enrollment of more than 6,500 of its California-based employees in a state-certified Health Care Organization (HCO) that provides medical care for workers injured on the job.

Operated by Health Net's Employer Occupational Services Group Managed Care Services (EOSG), Health Net's HCO was certified by the California Department of Industrial Relations' Division of Workers' Compensation (DWC) in September of 2001. In conjunction with AIG Claims Services, Inc. (AIGCS), Health Net provides its associates a workers' compensation medical care program designed to improve the quality and effectiveness of workers' compensation medical treatment programs. AIGCS is a member company of American International Group, Inc. (AIG).

Once an HCO is certified by the state, employers and workers' compensation insurers may contract with the organization to offer employees a provider network that specializes in occupational injuries and has agreed to pre-arranged fee schedules. In addition, HCOs allow for better coordination of care between the employees' primary treating physician and other specialists.

"We are pleased to enroll so many of Health Net's California-based employees in our HCO," said Thomas E. Ash, president of EOSG. "By applying the basic principles of managed care, including contracted networks and care coordination programs, we can help improve the quality of care at a reduced cost to the employer."

Under legislation signed by Governor Gray Davis in February 2002, employers are afforded an easier path for achieving the benefits of an HCO. The legislation allows the employer to extend the coordination of medical care for industrial injuries or illnesses from 30 days to 90 or 180 days. By extending medical control for a longer period of time, employers can provide injured workers with better coordination of quality medical care and early return to work programs in a more cost efficient way.

"With our own HCO, we can expand the product offerings that we provide to our clients," said Jay Gellert, president and chief executive officer of Health Net, Inc. "We think there is a good opportunity in this market -- and look forward to expanding our HCO book of business."

A study by the Washington-based National Academy of Social Insurance found that California workers' compensation benefits rose 13.9 percent in 2000. According to the California Labor Federation, AFL-CIO, the increase they experienced went entirely to pay for higher medical costs.

"AIGCS anticipates significant cost reduction by using an HCO in California," said Don Hunter, vice president of AIGCS' Medical Management Services.

"HCOs can help California employers improve the quality of work-related medical care and return to work programs, while controlling workers' compensation costs," added Richard Gannon, administrative director for the California Department of Industrial Relations. "They are an increasingly popular way for employers and carriers to provide medical care for injured employees."

Currently, EOSG offers employers two HCOs: CompAmerica Primary and CompAmerica Select. Both programs provide employers with a full-service physician network, including more than 40,000 providers in over 60,000 locations. Health Net's HCO program is certified in 54 California counties.

Employer Occupational Services Group Managed Care Services is a subsidiary of Health Net, Inc. Based in Irvine, Calif., EOSG provides workers' compensation-related managed care and cost containment programs to employers throughout the country. In addition, EOSG operates a state-certified HCO in California, where it provides employers with access to contracted networks of physicians who specialize in industrial injuries.

AIG is the world's leading U.S.-based international insurance and financial services organization, the largest underwriter of commercial and industrial insurance in the United States, and among the top-ranked U.S. life insurers. Its member companies write a wide range of general insurance and life insurance products for commercial, institutional and individual customers through a variety of distribution channels in approximately 130 countries and jurisdictions throughout the world. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in London, Paris, Switzerland and Tokyo.

Health Net, Inc. is one of the nation's largest publicly traded managed health care companies. Its mission is to enhance quality of life for its customers by offering products distinguished by their quality, service and affordability. The company's HMO, insured PPO and government contracts subsidiaries provide health benefits to approximately 5.3 million individuals in 15 states through group, individual, Medicare, Medicaid and TRICARE programs. Health Net's subsidiaries also offer managed health care products related to behavioral health, dental, vision and prescription drugs, and offer managed health care product coordination for multi-region employers and administrative services for medical groups and self-funded benefits programs.

For more information on Health Net, Inc., please visit the company's Web site at www.health.net.