California Insurance Department: Health Insurer Improperly Canceled Policies

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California Health Insurance Policy Violation

The California Department of Insurance in a report released last week alleged 67 violations of fair-claims handling laws by health insurer BC Life & Health after the company rescinded some members' health insurance coverage, the Los Angeles Times reports. BC Life & Health, owned by WellPoint, canceled 1,880 individual health insurance policies in 2004 and 2005. Insurance regulators reviewed 83 sample cases and issued citations in 49 of the cases for a number of violations, including:

  • Thirty-two citations for failing to promptly, fairly and equitably pay claims where liability was reasonably clear;

  • Twenty-seven citations for failing to adopt reasonable standards for the prompt investigation and processing of claims; and

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  • Four citations for misrepresenting policy provisions to consumers.

The citations could lead to fines of up to $10,000 apiece, if they are upheld, as well as follow-up examinations. The citations come several months after the California Department of Managed Health Care fined Blue Cross of California, which also is owned by WellPoint, $1 million for illegally rescinding individual health care coverage. A spokesperson for WellPoint said that the majority of the citations were for "technical violations of the claims-handling process" and that "in nearly every case, the DOI concluded that the rescission was appropriate."

A spokesperson for the California insurance department said officials also are investigating improper policy rescission by Blue Shield of California, HealthNet, Cigna and Aetna (Girion, Los Angeles Times, 7/3).

Reprinted with permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign up for email delivery at kaisernetwork.org/email . The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

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