California’s largest health care insurers are waiting for the Department of Managed Health Care (DMHC) to tell them which of their rescinded policies will be subject to review by an outside arbiter. The DMHC has been aggressively targeting insurers over their rescission policies, but insurers continue to deny that the issue is a problem.

DMHC investigation will review thousands of policies

The DMHC recently announced that it will review thousands of rescinded health care insurance policies from California’s largest insurers such as Blue Cross, Blue Shield, HealthNet, Kaiser Permanente and PacifiCare to determine whether the rescissions were legal. The Department will review the policies and forward them onto a third party arbiter for additional review. Those policies that are determined to have been rescinded illegally will be reinstated – and the insurance companies may be subject to fines and costs related to the rescission.

Insurers deny issue – industry analysts give examples

The DMHC has yet to inform the insurance companies which policies will be reviewed, but the insurers have already hinted that they may fight any reinstatements in court and maintain that they have a right to rescind policies when it is discovered that policyholders have materially misrepresented facts on their application. Industry analysts agree that this is their right; however, they also say that that right is being abused. They point to the various scandals and illegal practices in which insurers have been caught red-handed in the past six months, including:

• Blue Shield. California’s Insurance Commissioner announced that he is seeking $12.6 million in fines and penalties from Blue Shield of California Life & Health Insurance Company for over 1,200 violations.
• PacifiCare. California Insurance Commissioner and the DMHC announced that they are seeking $1.3 billion for over 130,000 alleged claim violations made by PacifiCare. It is the first action ever taken by both departments against a single health care provider.
• HealthNet. A private arbitration judge ordered HealthNet to pay $9 million after the company canceled a cancer patient’s coverage while she was in the middle of receiving chemotherapy treatments.

If your insurance company has wrongly rescinded your insurance policy or has denied paying valid insurance benefits, contact an attorney whose practice focuses in this area of law to discuss your situation as they may have acted in bad faith. Consultations are free, without obligation and are strictly confidential. To contact a qualified attorney, please click here. We may be able to help.