WellPoint accused of misleading public about rescissions

Los Angeles city prosecutors are accusing WellPoint (NYSE: WLP) of making false and misleading representations of rescission practices in press releases issued earlier this year. This action is the latest chapter in an ongoing case against WellPoint, the parent company of Blue Cross of California, regarding its practice of policy cancellations.

In April and May, WellPoint issued press releases denying it had cancelled health policies for women who were diagnosed with breast cancer. WellPoint's intent was to repair its corporate image, reports the Los Angeles Times. In another press release, WellPoint stated it would conform rescission practices to the health reform law's requirement, which prohibits rescission unless the insurance company can establish that the insured engaged in fraud or made an intentional misrepresentation of material fact on the application.

In an amended civil complaint against WellPoint, city attorneys allege the insurer's press releases inaccurately claimed it had changed its rescission-related procedures prior to the implementation of the federal health reform law. In addition, prosecutors said WellPoint continues to target women with breast cancer for possible rescission. They acknowledged that the company's policy cancellations had slowed to a "trickle," but said the problem still exists, the Times reports. WellPoint also failed to correct its unlawful rescission practices in California, the city attorneys said.

WellPoint denied any wrongdoing. "We stand by the statements we made regarding these issues," said the company. "The city attorney's allegations are misguided, and the company will vigorously defend the new claims along with the remainder of the two-year-old complaint."

To learn more:
- read the Los Angeles Times article
- view the Los Angeles City Attorney's Office press release