Challenge of Blue Shield Rescission Goes Before Orange County Jury

This week, an Orange County jury will begin hearing arguments in a lawsuit alleging that Blue Shield of California improperly rescinded a California man's health insurance policy in 2001, the Los Angeles Times reports.

This week's jury trial comes after an appellate court ruled that if insurers do not verify applicants' medical histories when coverage is offered, the insurers must show that members intentionally misrepresented their medical history to rescind coverage. 

The case is the second in California to focus on rescissions, but it is the first to go before a jury.  The other case was heard by an arbitration judge.

The Times reports that Blue Shield declined to comment on the case.

Context

Insurers' rescission practices have drawn criticism in recent years and sparked investigation by the state Departments of Managed Health Care and Insurance.

DMHC has collected more than $13 million in fines for rescissions and won agreements from insurers to:

• Develop more straightforward applications;
• Limit the time period of a person's medical history they will scrutinize;
• Work to verify applications before coverage is offered; and
• Notify members of rescission investigations in a timely manner.

Neither DMHC nor the insurance department have issued regulations to require insurers to take such steps, and rescission remains legal in California, according to the Times (Girion, Los Angeles Times, 5/18).