State Fines Blue Cross of California
The Department of Managed Health Care on Thursday fined Blue Cross of California $200,000 for illegally canceling the health insurance policy of an individual member, the Sacramento Business Journal reports (Robertson, Sacramento Business Journal, 9/21).
In the case, DMHC found that Blue Cross violated state law by not:
- Adequately examining a Southern California member's medical history before issuing health insurance coverage; and
- Establishing "that the member willfully misrepresented her health history."
Gov. Arnold Schwarzenegger (R) voiced support for the action (Girion, Los Angeles Times, 9/22).
DMHC has received about 200 similar complaints and is investigating allegations of improper cancellations of individual health insurance policies by Blue Cross, Blue Shield of California and Kaiser Permanente (Chan, Sacramento Bee, 9/22).
Blue Cross is a subsidiary of WellPoint Health Networks, the nation's largest health benefits provider (Los Angeles Times, 9/22).
Robert Alaniz, a spokesperson for Blue Cross, said, "This action is based solely on an individual case and is not indicative of our usual processes," adding, "We maintain the vast majority of rescissions to date are proper" (Colliver, San Francisco Chronicle, 9/22).
According to the Times, Blue Cross officials said they were disappointed by the state action, noting that they were working to address the member's complaint and policy changes announced Tuesday (Los Angeles Times, 9/22).
A Blue Shield representative said the company's policies are consistent with state law.
Kaiser officials said they are reviewing the situation (Sacramento Bee, 9/22).
Alaniz said Blue Cross had not decided whether it would pay the fine or appeal it (Los Angeles Times, 9/22).
Ehnes said legislative changes might be required to prevent consumers from having health insurance coverage dropped without proof that they intentionally did not disclose health information (San Francisco Chronicle, 9/22).
In letters to Ehnes and Insurance Commissioner John Garamendi (D), the Foundation for Taxpayer and Consumer Rights called for state regulators to audit Blue Cross' records of rescinded policies. FTCR also asked the state to require Blue Cross to disband a business unit that deals with policy cancellations and to submit its proposed cancellations to an independent reviewer (Los Angeles Times, 9/22).