Appeals Court Agrees To Reconsider Ruling on Policy Cancellations
On Thursday, a state appeals court agreed to rehear a case in which Blue Shield of California Life & Health Insurance was charged with illegally canceling policies after members submitted treatment claims, the Los Angeles Times reports.
A three-judge panel ruled unanimously on Dec. 4, 2007, that post-claims underwriting, or reviewing applications after claims are submitted, "is flatly prohibited." The ruling would allow policyholders to bring a class-action lawsuit against Blue Shield.
The panel added that insurers cannot cancel a member's policy if they do not attach a copy of the application to the policy.
Blue Shield contested the ruling, arguing that California law permits insurers to cancel individual health insurance policies for omissions or mistakes on applications, even if the mistakes are discovered after claims are submitted.
The insurer requested a rehearing of the case. The court has several options, including maintaining the ruling or reaching a new decision, according to the Times (Girion, Los Angeles Times, 1/5).