California’s Department of Managed Health Care announced yesterday that it plans to review every rescinded insurance policy from the state’s five largest insurers over the past four years. It estimates that thousands of insurance policies will be involved.

A stunning announcement

The announcement by Cindy Ehnes, Director of the DMHC, stunned many as this is the toughest stance the state has taken to combat the practice of policy rescissions to date. Working with Governor Schwarzenegger and the state’s Attorney General, Ehnes plans to review every insurance policy that has been rescinded by the state’s five largest insurance carriers in the past four years. Those insurers are:

• Anthem Blue Cross
• Kaiser Permanente
• Blue Shield
• PacifiCare
• Health Net

Each of these insurers has been accused of illegally rescinding insurance policies and/or employing questionable claims practices that negatively affect thousands of California policyholders. For example:

• Anthem Blue Cross. Los Angeles City Attorney, Rocky Delgadillo, filed a lawsuit against the insurer just a few days ago for illegally rescinding the insurance policies of 6,000 policyholders since 2002. Fines associated with the rescissions could reach $1 billion.
• Kaiser Permanente. Kaiser Permanente was fined $3 million in 2007 for haphazard investigations of questionable care, physician performance and patient complaints.
• Blue Shield . A 2007 investigation by the state’s insurance commissioner, Steve Poizner, accused Blue Shield of over 1,200 claims handling and regulatory violations that resulted in hundreds of policyholders losing their medical insurance. Fines could reach over $12.5 million.
• PacifiCare. In a combined effort late in 2007, California Insurance Commissioner Steven Poizner and the DMHC announced that they are seeking $1.3 billion for over 130,000 alleged claim violations made by PacifiCare.
• Health Net. Health Net was ordered to pay $9 million by a private arbitration judge in 2007 after the company canceled a cancer patient’s coverage while she was in the middle of receiving chemotherapy treatments. The insurer was also ordered to pay $1 million for lying to the DMHC in 2007 about tying bonuses to rescissions. In addition, a separate lawsuit was filed against the insurer by Los Angeles City Attorney, Rocky Delgadillo, for similar practices in February 2008.

These are just a few examples of how these insurers treated their policyholders in the past year – which is why Ehnes says…

People need their coverage now!

California’s government has been increasing its efforts to punish insurers that unlawfully rescind healthcare coverage – a practice that can be devastating to the people who often need coverage the most. Ehnes said, “We are moving forward now on restoring coverage and giving consumers the process they are owed as fast as possible. People need their medical bills paid and they need their coverage now!”

If your insurance company has wrongfully denied your insurance benefits or is using stalling tactics to delay payment, it may be acting in bad faith– which is against the law. To contact an attorney whose practice focuses in this area of the law to discuss your situation, please click here. We may be able to help. Consultations are free of charge, without obligation and strictly confidential.