The recent California Blue Cross class action settlement that accused the company of retroactively canceling health insurance polices that left policyholders without coverage is being touted as unfair by lawyers across the nation.

Settlement options

The May 10, 2007 settlement allows policyholders three options:

1. The first option allows policyholders to ask Blue Cross to review their rescission based upon a new standard whereby the company will determine if the policy was rescinded based on willful misrepresentation. If Blue Cross stands by its original decision, a policyholder can submit their claim to a retired judge who will review it again.
2. The second option permits a policyholder to accept a $1,000 payment in exchange for dropping all claims against the company – basically, take the money and run.
3. The third option allows a policyholder to opt out of the class action settlement altogether and bring a separate lawsuit against the company.

According to lawyers who specialize in bad-faith litigation, the three options leave consumers without adequate remedies as Blue Cross has said that it will not reinstate policies under any circumstances. This means that a policyholder who lost his or her insurance will have a very difficult time obtaining insurance from another insurer, thereby leaving them without insurance altogether.

It isn’t enough

Although Blue Cross has agreed to modify their current health history questionnaire with the help of California’s Department of Managed Healthcare, consumer groups and lawyers acting on behalf of consumers say that Blue Cross caused the problem and it’s the policyholders who are paying for the company’s mistake. Blue Cross’s previous health history questionnaire was confusing and many customers provided incorrect information in error – many have reported that they were trying to be complete and truthful, but didn’t understand how to complete the form. Blue Cross used that information against consumers to rescind policies. Admitting that the old questionnaires were flawed, but not agreeing to reinstate policies is at the center of the debate.

Blue Cross has responded by saying that rescissions are rare and necessary to combat fraud – something that is not being questioned by insurance experts. What is being questioned is Blue Cross’s unwillingness to admit that it made a mistake and to correct that mistake. That unwillingness has led to countless numbers of policyholders to fall into financial hardship for trying to be truthful on the questionnaires.

If you are part of the Blue Cross settlement, you must opt out of the class action to bring a private claim against the company or abide by the other two options listed above. To contact an attorney for a free consultation on what may be right for you, click here.