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| HealthNet and Anthem Blue Cross sued over rescissions | | Print | |
| Written by Lisa Girion - LA Times Staff | |
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Anthem Blue Cross sued over rescissions - Link to Article The state's largest for-profit health insurer, Anthem Blue Cross, was accused Wednesday of a widespread pattern of false advertising and fraud in a $1-billion lawsuit that claims that the company's coverage "is largely illusory." The suit says more than 500,000 people were tricked into buying individual and family policies from Blue Cross. "Countless Californians who believe they have insurance actually have policies that aren't worth the paper they're printed on" City Atty. Rocky Delgadillo says the health insurer made false promises of coverage and hid a scheme to drop sick policyholders. The company denies the allegations. The state's largest for-profit health insurer, Anthem Blue Cross, was accused Wednesday of a widespread pattern of false advertising and fraud in a $1-billion lawsuit that claims that the company's coverage "is largely illusory." Los Angeles City Atty. Rocky Delgadillo alleged in the suit that the insurer sold people false promises of coverage and concealed a scheme to renege on policies for those diagnosed with serious and often expensive medical conditions, including cancer and congestive heart failure. The suit says more than 500,000 people were tricked into buying individual and family policies from Blue Cross. "Countless Californians who believe they have insurance actually have policies that aren't worth the paper they're printed on," Delgadillo said. An Anthem Blue Cross spokeswoman said the company intended to vigorously defend itself and "strongly disagrees with the allegations." A spokesman for the insurer's parent company, Indianapolis-based WellPoint Inc., declined to discuss the allegations. The suit, filed in Los Angeles County Superior Court, accuses Blue Cross and WellPoint of violating more than 25 state and federal laws. It demands restitution for patients who were left with medical bills and seeks more than $1 billion in penalties. The suit identifies allegedly illegal practices that were brought to light in Times articles highlighting problems associated with the cancellation -- known as rescission -- of the policies of sick patients. In Sacramento today, Cindy Ehnes, the director of the Department of Managed Health Care, is expected to announce the reinstatements of several patients whose policies were rescinded by health plans as well as a process for other patients to have their rescissions reviewed and reconsidered. Patients whose coverage has been rescinded by Blue Cross praised the filing of the suit. "It's fantastic -- nobody should have to deal with this," said Jennifer Thompson. Blue Cross dropped the 61-year-old Palm Desert real estate agent last December after she had a hysterectomy for endometrial cancer that the health plan had approved in advance. Thompson was left with about $160,000 in medical bills and without insurance for the first time in her life. Blue Cross, she said, told her it dropped her for failing to disclose on her application that she had had breast cancer 11 years earlier. Thompson said the application had asked for 10 years of medical history. Still, she said, she asked the agent whether she needed to include the information and he told her no. Three days after arriving home from the surgery, "I received a letter from Blue Cross telling me they were pulling the rug out from under me," she said. "It was right before Christmas. It was a great gift." Blue Cross declined to discuss specific rescission cases. Patient advocates said the suit could be a powerful tool to help dumped patients win back coverage. "The complaint makes it very clear that a key part of the resolution will be to make sure everyone has coverage," said Jerry Flanagan, a patient advocate with Santa Monica-based Consumer Watchdog. Delgadillo said Blue Cross "engaged in an egregious scheme to not only delay or deny the payment of thousands of legitimate medical claims but also to jeopardize the health of more than 6,000 customers by retroactively canceling their health insurance when they needed it most." WellPoint spokeswoman Shannon Troughton said Anthem executives had wanted to discuss the allegation with Delgadillo before he took legal action. "Anthem has offered on several occasions to meet directly with the city attorney to provide further information on Anthem's rescission procedures," she said. "To date, the city attorney rejected each of these offers, and we are disappointed by his actions today because of our attempts to meet with him." Chief Asst. City Atty. Jeffrey Isaacs said the only request for a meeting came Friday from one of Blue Cross' outside lawyers. He said the company had not been forthcoming in providing requested documents. "It was seen as a typical lawyer delaying tactic," Isaacs said. "We saw no reason to meet with them, and we didn't think this was a particularly trustworthy company given their pattern of lies and deceptions to consumers over the last four years." WellPoint is developing an outside third-party review process for all rescission cases, Troughton said. She said the company had made changes in 2006 in its process for rescinding policies. The city attorney's office said the company appeared to have been less than candid about the touted changes. The company said in a February press release that it had developed a new coverage application in response to criticism that the current application was confusing and designed to trap people into making mistakes that could later be used to rescind coverage. The press release may have been unlawfully misleading because it failed to make clear that the new application had yet to be put into use, Isaacs said. The city attorney's office brought its first lawsuit against a health plan, Health Net Inc., in February. At the same time, Delgadillo's office launched a website, at www.protectingtheinsured.org, aimed at encouraging patients and physicians to share their complaints about the practices of health insurers. It has received more than 40,000 hits, he said. State Insurance Commissioner Steve Poizner said he would examine the allegations leveled in the suit and determine whether action was warranted. "The practice of rescinding health insurance only after a claim has been filed based on an insurer's failure to do its due diligence before issuing the policy is illegal and deplorable," he said in a statement. This e-mail address is being protected from spam bots, you need JavaScript enabled to view it ====================== April 17, 2008 L.A. City Attorney Files $1B Suit Against Anthem Blue Cross On Wednesday, Los Angeles City Attorney Rocky Delgadillo filed a $1 billion lawsuit against Anthem Blue Cross, the state's largest for-profit insurer, arguing that the company used illegal marketing and policy cancellation practices, the Los Angeles Times reports. The lawsuit alleges that more than 500,000 people were duped into purchasing individual and family health care policies from Blue Cross. The suit also accuses Blue Cross and its parent company, WellPoint, of violating more than 25 state and federal laws (Girion, Los Angeles Times, 4/17). Delgadillo filed the civil suit in Los Angeles County Superior Court, seeking damages of $2,500 for each violation, in addition to restitution (Orlov, Los Angeles Daily News, 4/16). Delgadillo Comments Delgadillo said that Blue Cross canceled more than 6,000 insurance policies and that the insurer "hides from consumers the fact that if the consumer requires an expensive medical procedure, there is a significant likelihood that Blue Cross will cancel their insurance policy" (Mohajer, AP/San Diego Union-Tribune, 4/17). He added that he is taking action against Blue Cross independent of the state Department of Insurance as part of an ongoing review of insurance company practices (Los Angeles Daily News, 4/16). Delgadillo filed a similar lawsuit against Health Net in February. Company Response A spokesperson for Anthem Blue Cross disputed the allegations and said the company intended to fight the case. WellPoint spokesperson Shannon Troughton said that the insurer's executives had wanted to discuss the allegation with Delgadillo before he took legal action but that his office declined the offer. She said WellPoint is developing an outside third-party review process for all of its cancellation cases. Patient Coverage Reinstatements Meanwhile, Cindy Ehnes, the director of the Department of Managed Health Care, is expected today to announce the reinstatements of several individuals' health policies that were canceled by health plans, as well as a process to review and reconsider other canceled policies (Los Angeles Times, 4/17). DMHC found that 90 cancellation complaints filed against Blue Cross were illegal, but the department did not initially require the insurer to reinstate any of the policies. Lynne Randolph, spokesperson for DMHC, said the announcement will require reinstatements for people dropped by health plans other than Blue Cross. She added that the department also is completing its investigations of cancellation practices for four other insurers (Howard/York, Capitol Weekly, 4/16). |
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