CA court says retroactive policy cancellations "prohibited"

A new legal ruling has dealt a blow to some California health plans, who have contended until now that canceling policies for unintentional application mistakes is acceptable under California law. A state appeals court has ruled that health plans may not go over applications after medical claims have been submitted, an approach known as post-claims underwriting, calling the practice "flatly prohibited." The courts said that a class-action suit filed to challenge this practice will be allowed to proceed.

Blue Shield of California Life & Health Insurance Co.--and other health plans in the state-- have insisted that state law allowed it to cancel individual policyholders who make omissions or misstatements on applications, even after medical claims have been submitted. Observers say that the appeals court decision court should pressure some insurers into changing their business practices before they're forced to by the state. Still, to date California health plans have seemed quite determined to make such cancellations, despite taking considerable heat from regulators and consumers.

To find out more about the case:
- read this Los Angeles Times piece

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