L.A. sues Blue Shield of CA over cancellations

Engaging in yet another battle with the state's health plans, Los Angeles City Attorney Rocky Delgadillo has filed a lawsuit contending that Blue Shield of California illegally canceled the policies of hundreds of beneficiaries. This move follows a number of similar actions by state and local officials, including a similar suit Delgadillo filed earlier this year against Anthem Blue Cross and million-dollar fines [1] against various health plans by the state Department of Managed Health Care. Regulators contend that the practice of rescinding policies for such innocent mistakes, known as rescission, is illegal under state law. Health plans, meanwhile, maintain that they're merely rooting out fraud.

In the current suit, Delgadillo argues that the plan has illegally canceled coverage of more than 850 policyholders. It asserts that the plan uses confusing applications to trick individual applicants into making innocent mistakes, then uses the mistakes to cancel policies when medical bills get high. Delgadillo is seeking fines and penalties totaling of more than $1 billion.

To learn more about the suit:
- read this Los Angeles Times piece [2]

Related Articles:
WellPoint pays hospitals $11.8M to settle bills from rescissions [3]
Kaiser forced to reinstate coverage [4]
Blue Cross of CA settles plan-cancellation suits [5]
Kaiser, Health Net agree to reinstate 1,200 beneficiaries [6]