Cancellations

L.A. city attorney says CA health insurer made illegal settlement offer

Anne Zieger — Tue, 14 Oct 2008 10:08:51 -0400

Anthem Blue Cross of California has apparently gotten itself into further legal problems while trying to extricate itself from previous ones. The insurance company, which was previously accused of rescinding some six thousand individual policies after members filed medical claims, has now been slapped with a suit by Los Angeles City Attorney Rocky Delgadillo for allegedly attempting to settle with ex-members unlawfully by offering them $1,000 to drop all legal claims.

According to Delgadillo, the WellPoint subsidiary apparently began sending out packets to 1,770 former members who had been disenrolled from individual policies in recent years. The packet allegedly included a letter offering them a $1,000 payment if they would release all legal claims against Anthem with "no questions asked." The notice also told former members that they'd be able to get new coverage as part of a separate settlement between Anthem and the state's Department of Managed Health Care.

Anthem and WellPoint are already in deep water with the city attorney. Delgadillo previously filed a $1 billion suit against the two, saying that they deliberately revoked about 6,000 individual policies after members filed medical claims. A hearing on that motion is set for Nov. 4.

For more information about this legal action:
- Read this Modern Healthcare piece (reg. req.)

CA governor vetoes bill banning some health policy cancellations

Anne Zieger — Wed, 01 Oct 2008 13:20:06 -0400

After years of controversy, in which the California's Department of Managed Health Care has struggled to stop health plans from retroactively canceling policies, Gov. Arnold Schwarzenegger (R) has vetoed a bill cracking down on this practice. This comes after the DMHC imposed multiple million-dollar fines on insurers that have canceled individual policies inappropriately, most recently in a $13 million settlement detail with Anthem Blue Cross and Blue Shield that forced the plan to reinstate thousands of people who had lost their coverage.

The new bill would have created an independent review process to examine each case of "rescission," as these cancellations are known. Under this new system, policies could be rescinded only if the health plans could prove consumers deliberately misrepresented the state of their health on their application.

Schwarzenegger said he vetoed the bill because it didn't include certain consumer protections and would benefit attorneys who wrote it. The governor wanted six other protections included in the text, including a rule demanding that insurers continue coverage for family members of someone whose policy had been dropped. However, a provision offering just this protection is included in a separate bill that the governor has already approved.

To learn more about the bill:
- read this Associated Press piece

Related Articles:
PacifiCare faces $1.33B fine
BC of California fined $1M for cancellations
Kaiser forced to reinstate coverage
CA agency mulls review of policy cancellations

CA Blue plans will pay $13M in fines over cancellations

Anne Zieger — Fri, 18 Jul 2008 11:06:18 -0400

Two of the state of California's largest health plans have agreed to pay a combined total of $13 million in fines related to their practice of rescinding policies for members after those members became sick. The fines are the largest yet imposed by the state Department of Managed Health Care, which has been focused of late on stopping health plans from reviewing patient applications and canceling policies after the patient begins incurring large medical bills. In addition to the fines, the agreements will require the two plans, Anthem Blue Cross and Blue Shield, to offer new coverage to more than 2,200 beneficiaries. However, the two are not admitting any wrongdoing.

WellPoint-owned Blue Cross will pay a record $10 million fine, and will offer no-strings-attached coverage to 1,770 members whose policies were canceled since 2004. Competitor Blue Shield, meanwhile, will pay $43 million and offer new policies to 450 people whose policies were discontinued during the same period. Both health plans have agreed to set up a process to help ex-members recover medical bills paid out of pocket after they were dropped, as well as collect other damages, such as reimbursement for homes or business lost because unpaid medical bills ruined the patients' credit. The agreements follow on similar settlements with Kaiser Permanente, Health Net and PacifiCare.

To learn more about the agreements:
- read this Los Angeles Times piece

Related Articles:
WellPoint pays hospitals $11.8M to settle bills from rescissions
BC of California fined $1M for cancellations
Kaiser forced to reinstate coverage
Blue Cross of CA settles plan-cancellation suits

PacifiCare restores canceled policies

Anne Zieger — Fri, 20 Jun 2008 11:51:13 -0400

Health plan PacifiCare of California has agreed to restore coverage to consumers whose individual policies, the state says, were canceled unfairly. Under the terms of its agreement with state's Department of Managed Health Care, the health plan will offer coverage to three consumers whose coverage was canceled within the last four years, and stand ready to reimburse for past medical claims. The health plan will also offer coverage to 57 former members, as well as expedited dispute resolution for claims. In addition, PacifiCare has agreed to pay a $50,000 fine and agree to a corrective action plan. It must comply with the corrective action plan within one year or face another fine of $500,000.

In settling with the state, PacifiCare is following in the footsteps of Kaiser and Health Net, both of which were slapped with fines of $300,000, and potential added fines of $3 million, over charges that they rescinded coverage inappropriately for members with individual policies. The state has also offered settlements to Blue Shield and Anthem Blue Cross, which are pending.

To learn more about the state's actions:
- read this Sacramento Business Journal article

Related Articles:
Health Net fined $1M for non-disclosure of cancellation bonuses
BC of California fined $1M for cancellations
Health plan industry addressing policy cancellations
Kaiser forced to reinstate coverage

CA regulators begin broad review of policy cancellations

Fri, 18 Apr 2008 06:59:57 -0400

In a move that could cost health insurers untold dollars, and possibly change the dynamics of the individual coverage market, the California Department of Managed Health Care has begun reviewing thousands of individual policy cancellations by the state's five major health plans. The DMHC will turn over policies dropped by the plans to an independent arbiter, who will determine whether the policies were inappropriately canceled. If the policies were wrongly canceled, the DMHC will require the health plans to reinstate those patients, and what's more, to pay all of the patient's bills incurred while the patients didn't have coverage. Meanwhile, the DMHC is ordering Anthem Blue Cross, Kaiser Permanente and Blue Shield to immediately reinstate 26 patients whose policy cancellations, in its view, were wrong on their face.

This move is perhaps the boldest in a long string of actions the DMHC has taken to prevent the state's health plans from canceling individual policies when individuals incur high medical bills. The DMHC contends that canceling such plans because of innocent mistakes on applications is unlawful.

To learn more about the DMHC's review:
- read this Los Angeles Times article

Related Articles:
BC of California fined $1M for cancellations
Kaiser forced to reinstate coverage
HealthNet set goals, bonuses based on policy cancellations
Kaiser pushes for policy-cancellation rules

Los Angeles sues Anthem for individual policy cancellations

Thu, 17 Apr 2008 06:59:58 -0400

The Los Angeles city attorney has sued Anthem Blue Cross for allegedly canceling coverage of thousands of members after they filed large medical claims. In doing so, it's following the lead of the state's Department of Managed Health Care, which has conducted an ongoing campaign against such practices. City attorney Rocky Delgadillo contends that Anthem, its parent company WellPoint, and another subsidiary unlawfully revoked the policies of as many as 6,000 members. What's more, he argues that the plans' 500,000 individual policyholders have been defrauded, because their policies won't actually help them if they get sick. Delgadillo is seeking $2,500 per violation, or $5,000 if the victim is disabled or a senior--numbers that could amount to costs of more than $1 billion if the city wins its suit.

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

Related Articles:
LA files more patient dumping cases
HealthNet set goals, bonuses based on policy cancellations
CA regulators plan limits to health policy cancellations
Blue Cross of CA settles plan-cancellation suits

Bill may narrow health plan coverage exclusions

Mon, 24 Mar 2008 07:59:58 -0400

Right now, when consumers change health plans, federal law allows the new plan to refuse coverage of pre-existing conditions for 12 months. However, things may end up being different if a new bill limiting such exclusions passes. In addition to cutting the 12 month pre-existing coverage exclusion to three months, the bill also would bar insurers from looking back more than 30 days in a patient's health record to see whether there are pre-existing conditions. Right now, federal law allows them to look back six months. The bill, authored by U.S. Rep Joe Courtney (D-CT), primarily is aimed at helping people who are moving from one employer's health plan to another, or are switching from group coverage to an individual policy. However, the bill also could have a significant impact on millions of people who are attempting to enter the health insurance market by buying individual policies, which have been somewhat under siege.

To learn more about the bill:
- read this article from The Hartford Courant

Related Articles:
U.S. health plans propose to boost individual coverage. Report
Health coverage cancellation rules slowed in California. Report
Blue Cross of CA settles plan cancellation suits. Report
Kaiser pushes for policy cancellation rules. Report
Kaiser forced to reinstate coverage. Report
CA agency mulls review of policy cancellations. Report

SPOTLIGHT: CA cancellations bring national attention to issue

Mon, 10 Mar 2008 07:59:52 -0400

In recent months, California regulators have tightened the screws on health insurers who allegedly cancel individual policies as soon as patients rack up bills. Their efforts have turned up so many "smoking guns" that it seems clear something is out of order here--and perhaps, in the whole system nationally. Now, with the California efforts resounding around the country, other regulators are looking at cancellations in their states. Article