Insurance Chief Inks Deal With Health Net Over Rescissions
The California Department of Insurance has reached an agreement with Health Net that will have the insurer pay $3.6 million in penalties and reinstate coverage for 926 people whose policies Health Net had rescinded, the Los Angeles Times reports.
Under the agreement, Health Net expects to pay more than $14 million to cover the cost of care that would have been covered by the policies of the members whose coverage was rescinded.
In addition to fines, Health Net will work with the department to modify its business practices and reduce rescissions. Health Net could face an additional $3.6 million in fines if it does not make all the changes advocated by the insurance department.
The company did not admit any wrongdoing under the agreement (Girion et al., Los Angeles Times, 9/12).
Insurance Commissioner Steve Poizner (R) is scheduled to announce the deal today (George, Los Angeles Daily Journal, 9/12).
The settlement with Health Net marks the insurance department's first enforcement action on health insurance policy rescissions.
The Department of Managed Health Care has negotiated similar settlements with health insurers in recent months.
Poizner said the department will continue similar investigations into other insurers (Los Angeles Times, 9/12).
News of the settlement drew immediate criticism from attorneys involved in other lawsuits over rescissions by Health Net.
William Shernoff, an attorney representing policyholders in a class-action suit against Health Net, said that he and Los Angeles City Attorney Rocky Delgadillo would seek an injunction to block Health Net or state regulators from contacting policyholders about the settlement.
As city attorney, Delgadillo has filed a civil action against Health Net over its rescissions (Los Angeles Daily Journal, 9/12).