Health Net will pay $1.95 million in recession suit

Marking another landmark in a titanic struggle between health plans, providers and consumers over the right to cancel policies, Health Net has agreed to pay $1.95 million to California hospitals to settle claims over rescission of individual policies.

The California Hospital Association had launched a class-action suit against Health Net bringing 200 hospitals together. It arose from Health Net's decision to revoke individual policies during the period between February 2004 and October 2007.

The health plan had previously settled with the California Department of Insurance for $3.6 million in penalties, plus up to $14 million in reimbursements for medical charges, in regards to 926 people whose policies it canceled retroactively after they became sick.

Under the terms of the settlement, Health Net has agreed to set up a fund to reimburse hospitals for services they provided to rescinded members. Health Net has also agreed to give hospitals a list of rescinded patients, so patients will be free from actions by creditors over unpaid bills.

To learn more about the suit:
- read this Modern Healthcare piece (reg. req.)

Related Articles:
Health Net set goals, bonuses based on policy cancellations
Health Net reinstating 926 California policyholders
Kaiser, Health Net agree to reinstate 1,200 beneficiaries
CA residents to get renewed health coverage

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