The consumer group, Consumer Watchdog, has criticized California’s Department of Managed Health Care (DMHC) and Governor Schwarzenegger’s office for not forcing Blue Cross to reinstate rescinded health insurance coverage in over 90 cases where the rescission was deemed illegal.

Not enough being done

Jerry Flanagan, the Health Policy Director of Consumer Watchdog (formerly known as the Foundation for Taxpayer and Consumer Rights), says that not enough is being done regarding illegal rescissions of health care insurance policies. In fact, he referred to the speed at which changes are occurring as a “glacial pace.” According to a press release on the Consumer Watchdog’s website, www.consumerwatchdog.com/, Flanagan says:

Despite the department’s own finding of widespread abuse, patients still are not protected from arbitrary loss of their insurance coverage when they fall ill. The Department has not ordered the reinstatement of any enrollees in Blue Cross, despite DMHC’s own determination that in every one of 90 cases examined, Blue Cross acted illegally. This glacial pace is harming real people.

The controversy surrounds the DMHC’s fine against Blue Cross of California for $1 million in March 2007 for illegally rescinding health insurance policies and for not conforming to state law. After reviewing case documents, the DMHC found that, 1) in nearly every case, Blue Cross did not prove that policyholders willfully misrepresented their medical histories before coverage was rescinded, and 2) in half of those cases, Blue Cross did not conduct a thorough and complete pre-enrollment investigation of applicants’ medical histories (or even to its own underwriting policies) before issuing coverage.

Group also challenges Governor

The group has also challenged Governor Schwarzenegger after rumors surfaced that he told the DMHC to “pull back” on the new regulations which state that individual health insurance policies can be cancelled only for “willful misrepresentation” by the applicant. The challenge came in the form of a letter sent to the Governor on March 26, 2008.

If your insurer has illegally rescinded your health care coverage, contact an attorney whose practice focuses in this area of the law as the rescission may constitute bad faith. To contact a qualified attorney, please click here. Consultations are free, strictly confidential and are without obligation.