Free Case Evaluation

The practice of rescinding healthcare insurance policies has become a loophole for many insurers to avoid paying claims. However, help may be on the way for consumers. The insurance industry group, America’s Health Insurance Plans (AHIP) has proposed an independent appeals process for policyholders whose insurance companies have rescinded coverage. The proposal is in response to increasingly heavy fines, investigations and multi million dollar damage awards against insurers from state regulators, judges and juries.

Case in point: Blue Cross of California

Blue Cross of California is just one of the many insurers who have been fined for illegally rescinding health insurance policies. In March 2007, California’s Department of Managed Health Care (DMHC) fined the insurer $1 million for illegally rescinding health insurance policies and for not conforming to state law. After reviewing case documents, the DMHC found that:

• In nearly every case, Blue Cross did not prove that policyholders willfully misrepresented their medical histories before coverage was rescinded.
• 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.

According to an article in the Wall Street Journal (WSJ), Blue Cross’s parent company Well Point Inc. has stated that it may create a similar independent panel that will allow policyholders to appeal claim decisions. However, industry analysts say that aren’t holding their breath as Blue Cross was recently blasted by consumer advocate groups, Governor Schwarzenegger and even Senator and presidential candidate Hillary Clinton over its practice of asking doctors to review patients’ applications for conflicting information in order to help it rescind policies. Blue Cross put a halt to the practice soon afterwards.

Details of the proposal

The WSJ reported that the group’s proposal would create an external independent panel of health care professionals and attorneys who would review an insurance company’s decision to rescind a health care insurance policy and provide a binding decision for both parties. While still in its early stages, the AHIP has said that it plans to move ahead quickly in order to get state insurance commissioners on board.

If your valid insurance claim has been denied, your insurer may be acting in bad faith. It’s important to realize that you have rights. To contact an attorney whose practices focuses in this area of law, please click here. The consultation is free, without obligation and strictly confidential.