State Orders Kaiser To Reinstate Policyholder
The Department of Managed Health Care on Wednesday ordered Kaiser Foundation Health Plan to reinstate coverage for an individual policyholder because the insurer's cancellation of the coverage was ruled illegal, the Los Angeles Times reports. DMHC said there was no evidence that the patient intentionally lied about her medical history.
The decision marks the first time that the state has ordered an insurer to reinstate coverage.
In September, DMHC fined Blue Cross of California $200,000 for illegally revoking an individual insurer's coverage but did not order Blue Cross to reinstate coverage.
Both orders mark the only two times to date that the state has ruled in favor of consumers in cancellation cases (Girion, Los Angeles Times, 10/19).
DMHC expects to take further enforcement action regarding insurers' illegally revoking policies, agency spokesperson Jan Mendoza said (Colliver, San Francisco Chronicle, 10/19).
In a similar case, Blue Cross this week settled more than 70 lawsuits and claims filed by individual health plan members who alleged that Blue Cross illegally revoked their coverage after treatment (California Healthline, 10/18).
William Shernoff, who represented plaintiffs in the Blue Cross matter, said his firm is handling similar cases against Blue Shield of California and Health Net (San Francisco Chronicle, 10/19).
Insurers say that it is legal to cancel a policy regardless of whether omissions on applications for coverage are intentional and that revoking coverage is a strategy used to address fraud.
However, DMHC and consumer lawyers disagree, saying that state law prohibits a policy from being cancelled for unintended mistakes (Los Angeles Times, 10/19).
KPBS' "KPBS News" on Wednesday reported on the Blue Cross settlements. The segment includes comments from Bryan Liang, executive director and professor at the Institute of Health Law Studies at California Western School of Law (Goldberg, "KPBS News," KPBS, 10/18).
The complete transcript is available online. The complete segment is available online in Windows Media.