Blue Cross Illegally Canceled Policies, Agency Finds
The Department of Managed Health Care has concluded that Blue Cross of California violated state law by improperly canceling health insurance policies and that the insurer did not adequately verify medical information prior to issuing coverage, a department spokesperson said Friday, the Los Angeles Times reports. Blue Cross is a subsidiary of Wellpoint Health Networks.
DMHC Spokesperson Lynn Randolph said the agency could take action against the insurer this week.
State regulators last spring launched an investigation of the HMO after policyholders said their policies were terminated illegally after seeking costly medical care. The former policyholders allege that their policies were canceled without evidence that they intentionally omitted information in their policy applications. The suits also claim that insurers use vague and confusing applications that lead to mistakes, which later can be used to cancel coverage.
Some lawsuits also name Blue Shield of California. Both companies have denied any wrongdoing. The investigation of Blue Shield is ongoing.
According to Randolph, DMHC's action against Blue Cross "is not a consent agreement." She said, "It is not something we are working out with the plan to come to a negotiated settlement on. We will be bringing a fine and bringing an action against them for violating the law."
A Blue Cross spokesperson said the company had no comment on the action because it has not officially received notice of DMHC's plans (Girion, Los Angeles Times, 9/17).