LOS ANGELES- The Los Angeles City Attorney's Office announced today the filing of an Amended Complaint against WellPoint, Inc. and its California subsidiaries, Anthem Blue Cross and Blue Cross Life and Health Insurance Company, to put an end to their illegal practices of rescinding health care coverage.
The City Attorney's civil enforcement action against WellPoint was filed in April 2008 alleging that, from 2002 to 2008, WellPoint's California subsidiaries unlawfully rescinded the healthcare coverage of approximately 6,000 of their members. WellPoint sold approximately 1.8 million policies to California consumers that, because of their undisclosed rescission practices, provided largely illusory health care coverage.
In its Amended Complaint in People v. WellPoint, Inc. et al., (Los Angeles Superior Court Case No. BC389110), the City Attorney alleged that WellPoint made false and misleading representations to the public in multiple press releases in April and May of this year.
WellPoint's intent was to repair its corporate image, which had been tarnished by news reports that it intentionally rescinds health care coverage of breast cancer patients.
On April 22, April 23 and May 7, 2010, WellPoint issued three press releases denying a February, 2010 Reuters story outlining the case of two women whose coverage had been rescinded after they were diagnosed with breast cancer.
The City Attorney's Office alleges that the three press releases were false and misleading because, in fact, WellPoint targeted victims of breast cancer for rescission by using a computer program that triggered the rescission process much in the manner reported by Reuters.
In a fourth press release, issued on April 27, 2010, WellPoint represented that its subsidiaries would conform their rescission practices to the newly enacted Patient Protection and Affordable Care Act beginning May 1, 2010, five months before the new federal restrictions were to take effect. These new restrictions prohibit rescission unless the insurance company can establish that the insured engaged in "fraud" or made an "intentional misrepresentation of
material fact" on his or her application. This law applies to coverage issued after September 23, 2010.
Contrary to its representations, WellPoint failed to correct its unlawful rescission practices in California as of May 1, 2010.