Managed care

L.A. sues Blue Shield of CA over cancellations

Anne Zieger — Thu, 17 Jul 2008 11:26:28 -0400

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 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

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

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Net, both of which were slapped with fines of $300,000, and potential added fines of $3 million, over charges that they rescinded coverage inappropriately for members with individual policies.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