The State of California Department of Insurance recently completed a targeted evaluation of BC Life’s claim rescission handling practices and found that the company’s determinations to rescind policies was incorrect – 72% of the time! If you do the math, that means they were only correct 28% of the time. Not a very good report card.

Poizner seeking changes

California Insurance Commissioner Steve Poizner has vowed to take action on the issue – the first since he took office in January 2007. That could spell trouble for BC Life and it is estimated that the 67 citations could lead to fines of as much as $10,000 per each sustained infraction as well as the costs of any additional examinations. BC Life is on the chopping block right now, but the department is planning to investigate other insurers such as Blue Shield, Health Net, Cigna and Aetna in the future.

What the investigation found

The department reviewed 93 of BC Life’s rescissions on Accident and Disability / Individual Health policies and found violations on 67 of those (72%). The reasons for the 67 violations included:

• Failure to effectuate prompt, fair and equitable settlements of claims in which liability had become reasonably clear (32 violations)
• Failure to adopt and implement reasonable standards for the prompt investigation and processing of claims arising under its insurance policies (27 violations)
• Failure to represent correctly to claimants, pertinent facts or insurance policy provisions relating to any coverage issue (4 violations)
• Failure to maintain all documents, notes and work papers in the claim file (2 violations)
• Persistent seeking of information not reasonably required for or material to the resolution of a claim dispute (1 violation)
• Failure to provide the written basis for the denial of the claim (1 violation)

To review the department’s findings, go to: http://www20.insurance.ca.gov/epubacc/REPORT/98969.htm.

BC Life has denied any wrongdoing.

The bottom line

When an insurer rescinds a healthcare policy, it is doing more than just denying coverage for the entire policy period. Consumers whose policies have been rescinded will find it very difficult to obtain insurance elsewhere as a rescission has the effect of blacklisting them. The bottom line is – if you’ve been denied coverage due a wrongful rescission, you need an attorney who understands how insurance companies operate so that you won’t have to fight the rescission alone and risk being turned down for insurance coverage in the future. To consult with an attorney near you, click here.