California Regulators’ Actions on Rescissions Draw Criticism
Representatives of Los Angeles City Attorney Rocky Delgadillo and some private attorneys are voicing criticism of settlements between the Department of Managed Health Care and major health insurers in California, arguing that the agreements do not go far enough in punishing the insurers, the Los Angeles Daily Journal reports.
The issue centers on health plans' rescission of individual members' coverage after they submitted claims.
Delgadillo has filed separate actions against some of the health plans, and private attorneys are pursuing class-action lawsuits against the insurers.
Earlier this month, DMHC announced settlements with Anthem Blue Cross and Blue Shield of California, the last two of California's five major health insurers to settle with state regulators.
Under the agreements, the insurers collectively will reinstate coverage for 3,454 people whose policies had been rescinded. Fines ranged from a high of $10 million for Anthem Blue Cross to $50,000 for PacifiCare.
Settlements with each of the five health plans -- Anthem Blue Cross, Blue Shield of California, Health Net, Kaiser Permanente and PacifiCare -- state that:
- Health plans must notify members whose coverage was rescinded about the settlement within 45 days;
- Insurers will offer former members coverage without requiring them to undergo medical underwriting;
- Members whose coverage was rescinded will maintain the right to bring other legal action against the insurers; and
- California regulators and the health insurers will use arbitrators to determine if the health plans must reimburse members' out-of-pocket health care costs after their coverage was rescinded.
None of the insurers admitted wrongdoing in the settlements.
Private attorneys pursuing suits against Anthem Blue Cross hope to block the settlements from taking effect.
In addition, Jeff Isaacs, chief of Delgadillo's criminal and special litigation section, said that the agreements are plagued with problems and in some cases are overly broad, raising questions about whether future action on rescissions can be taken against insurers.
DMHC Director Cindy Ehnes described the agreements as a win for consumers, saying, "I'd love to see someone come up with something that isn't a class-action or an individual lawsuit that provides this kind of expedited process."
Ehnes also said that the department's final report on rescissions would be made public, possibly within 10 days. However, DMHC agreed not to use the report to pursue other actions against the insurers (George, Los Angeles Daily Journal, 7/28).