Blue Cross of California Cancels Individual Health Policies: Post-Claim Underwriting Alleged
An alarming (and illegal) practice of health is the focus of numerous
lawsuits, recently filed in several California counties. That practice is the improper “rescission” of health insurance contracts by health insurers who, as alleged by various pending lawsuits, systematically and calculatedly cancel health policies on the basis of alleged “material misrepresentation,” but do so only after a sizable claim has been submitted to the insurer. The practice of waiting for a claim to come in and then canceling the policy retroactively is known as “post claims underwriting.”
In 1993, Section 1389.3 of the Health & Safety Code of California, was specifically put on the statutory books to prohibit post-claim underwriting:
“Postclaims underwriting prohibited:
No health care service plan shall engage in the practice of postclaims underwriting. For purposes of this section, “postclaims underwriting” means the rescinding, canceling, or limiting of a plan contract due to the plan’s failure to complete medical underwriting and resolve all reasonable questions arising from written information submitted on or with an application before issuing the plan contract. This section shall not limit a plan’s remedies upon a showing of willful misrepresentation.”
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California law (as well as in other states) routinely recognizes that , in order to justify a rescission (i.e. cancellation) of an insurance policy on the basis of a “material misrepresentation” or “material concealment,” the insurance company must prove that the prospective applicant had an “actual intent to deceive” when he/she applied for coverage. A 1973 California Supreme Court found that if an applicant for insurance had “…no present knowledge of the facts sought, or failed to appreciate the significance of information related to him, his incorrect or incomplete responses would not constitute grounds for rescission”
(Thompson v. Occidentald 9 Cal.3d 904, 916, 109 Cal.Rptr. 473, 480). This proposition remains the law in California.
Rescission of health coverage is devastating. The insured is often left with no coverage and huge medical bills, and needed follow-up care is iffy because coverage has been cancelled. The damages caused by an improper rescission can be overwhelming.
For more information on the cancellation of health coverage by Blue Cross of California, click here.
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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]
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