Blue Cross of California settles another policy cancellation suit

Blue Cross of California has settled a lawsuit challenging its policy-cancellation practices, agreeing to stop rescinding individual policies unless it can prove that a beneficiary intentionally lied on their application. The agreement brings the curtain down on a class-action lawsuit involving 6,000 policyholders, who argued that the health plan had improperly canceled their coverage in a manner violating state law. The managed care company had contended that they have the right to cancel individual policies if there are errors or inconsistencies on an application, even if the mistakes were unintentional. Now, not only will Blue Cross limit itself to alleged wrongdoers, policyholders that do get canceled will be notified of their options, which include dropping objections in exchange for $1,000 and having the cancellation reviewed by the plan. 

This is just the most recent of a mountain of legal issues facing the WellPoint subsidiary. The plan has already been rebuked for such practices by the state's Department of Managed Health Care, which fined Blue Cross $1 million earlier this year for failing to check out application errors with beneficiaries before canceling policies. The Blue plan also settled a group of 70-odd suits last year that alleged that the plan canceled members' insurance when the members got sick.  Meanwhile, it's still litigating a suit brought by hospitals and doctors that argues that the plan wrongly denied them payments for the patients whose policies were canceled. Even by the standards of giant insurers like this one, which often seem nearly invulnerable, we're talking about a serious headache right here.

To find out more about the case:
- read this Kaiser Daily Health Policy Report item

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