February 18, 2009

L.A. Targets Health Insurance Revocations

The Los Angeles City Attorney’s office is investigating whether insurance companies have unfairly or illegally revoked the health-insurance policies of more than 8,000 Californians.

California Lawyer Magazine reports that the practice may also threaten about 3 million middle-class Californians.

In some cases, sick and dying patients lost their health insurance due to alleged “misstatements” made on already-approved applications. These include weight changes or the omission of prior conditions sometimes unrelated to a patient’s costly illness.

Insurance companies said they are protecting their businesses against consumer fraud, and that their side of the story is not well publicized due to privacy laws for patients.

Critics say that the applications are ambiguous and “designed to confuse,” creating opportunities for misstatements that could eventually enable insurance companies to drop more expensive policyholders.

Last July, Blue Cross, Blue Shield and Health Net agreed to reinstate numerous canceled policies and recover expenses, and to pay fines totaling of $18.3 million.

One plaintiff also won more than $9.5 million from Health Net over a policy revocation.

–Lauren Riggs/Newsdesk.org

Source:

“Coverage in Tatters”
California Lawyer Magazine, February 2009

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