California Regulators Cite Health Insurer in Policy Cancellations
In a report issued last week, the Department of Insurance alleged that health insurer BC Life & Health had violated fair-claims handling laws in 67 cases when it revoked members' health insurance coverage, the Los Angeles Times reports.
The insurer, 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. The citations include:
- 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
- Four citations for misrepresenting policy provisions to consumers.
The citations, if sustained, could lead to fines of up to $10,000 each, as well as follow-up examinations.
A spokesperson for the insurance department said officials were investigating rescissions by other insurers as well, including Blue Shield of California, HealthNet, Cigna and Aetna.
A spokesperson for WellPoint defended the company record on policy cancellations, saying that most of the alleged infractions were procedural and that the department had concluded that most cancellations were appropriate.
The citations come several months after the Department of Managed Health Care fined Blue Cross of California $1 million for illegally rescinding individual health care coverage. Blue Cross also is owned by WellPoint (Girion, Los Angeles Times, 7/3). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.