Complaints have charged that Blue Cross often waited until the applicant made a claim for coverage of a serious condition before canceling a medical policy. This practice left people uninsured at the worst possible time. As Blue Cross, part of Indianapolis-based WellPoint, Inc., is the largest health insurer in California, its practices affected a large number of people.

Blue Cross is not the only insurance company to rescind individual health coverage policies because of inadvertent errors, confusion, or honest mistakes, however. A recent Los Angeles Times article predicted that Blue Cross’s agreement to change its practices will send shock waves through the health insurance industry that, up to now, has been united in the argument that it needs to be able to rescind policies for honest mistakes in order to protect against fraud.

Other major health insurers in California include Blue Shield, Kaiser, Aetna, and Health Net. Complaints of wrongful and unfair cancellations have been filed against several of those companies as well as Blue Shield. Those companies have not yet agreed to change their policy-rescission practices and to stop canceling policies because of mistakes. Patient advocates, the California insurance Commission, and the California Department of Managed Health Care all agree that insurance companies are only allowed under the law to cancel individual health policies for willful misrepresentation by the applicant. So there’s a long way to go before this issue is fully resolved in California.

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