The California Department of Managed Health Care (DMHC) is bringing the hammer down on Blue Cross of California (BCC). The DMHC has fined BCC $1 million after finding that it systematically and illegally canceled policies held by chronically ill and pregnant policyholders. Under state law, California health plans may only cancel individual policies if a policyholder intentionally lied on an application to cover up a pre-existing medical condition. But BCC violated this standard regularly, using computer software and an entire dedicated department to identify and cancel the policies held by pregnant women and chronically ill patients regardless of whether they intentionally lied on their applications, the DMHC concluded.
WellPoint, which owns BCC, defended the cancellations, stating that the majority of the rescissions were "unquestionably proper." Some observers, meanwhile, are suggesting that BCC hasn't been punished enough--that the $1 million isn't a large enough fine to deter WellPoint from future violations, given its $56.95 billion in annual revenues. State regulators, for their part, continue to investigate other California health plans for similar alleged violations.
To learn more about the DMHC's conclusions:
- read this piece from the Los Angeles Times