Garamendi imposed an $8 million fine in 2005 on another insurer, UnumProvident Corp., for illegally refusing benefits to Californians. California’s Department of Managed Care has announced that it will investigate a related company, Blue Cross of California. Both Blue Cross and Blue Cross of California are owned by WellPoint Inc, which owns many other insurance units around the United States.

Blue Cross of California wrongfully cancel your individual policy? You may have a lawsuit. Click here, for a top rated law firm to evaluate your legal rights. [Sponsored Link]

The allegations against Blue Cross came to the notice of California regulators after several lawsuits were filed in Southern California on March 27, 2006 claiming that Blue Cross had wrongfully denied benefits and cancelled the policies of several Californians insured by the company. The complaints allege that Blue Cross had a “retroactive review department” that looked for ways to cancel policies after large claims were filed.

Under California Health & Safety Code §1389.3 medical insurance companies are forbidden to engage in a practice called “post-claims underwriting.”. This practice means that the insurer waits till a large claim is filed and then looks for an excuse to cancel the policy and deny the claim. The law requires medical insurance companies to investigate applications at the time they write the policy. Health insurers can only cancel the policy later if they can show that the insured engaged in willful misrepresentation, meaning that the applicant for the insurance policy intentionally lied to get coverage or to get coverage at a lower cost.

The lawsuits against Blue Cross allege that Blue Cross had a practice of investigating policies at the time a large claim was made instead of at the time the policy was issued. In a case filed in 2005, Blue Cross of California was accused of denying more than $100,000 in benefits almost 2 years after the policy had been issued. If Blue Cross of California had investigated the claim at the time the policy was written, the insured could have contested the decision or could have gotten other coverage.

Most medical insurance policies have a 2-year limit on the time the company can rescind the policy. This is known as an “incontestability clause.” The California Supreme Court ruled in 2000, in the case of Galanty v. The Paul Revere Life Insurance Company, that insurance companies are bound by those clauses and cannot cancel the policy after the 2 years are up. In that case Galanty was HIV positive, but had not been diagnosed with AIDS. The court held that the insurance company could not deny benefits for treatment of AIDS 5 years after the policy had been issued.

Blue Cross of California wrongfully cancel your individual policy? You may have a lawsuit. Click here, for a top rated law firm to evaluate your legal rights. [Sponsored Link]