California State Insurance Regulators Add Kaiser Permanente to Major Industry Investigation
Kaiser Foundation Health Plan has become the second major California health plan provider to have its insurance cancellation activity held illegal. Blue Cross California, the largest California provider, which is owned by WellPoint Inc. of Indianapolis, was fined $200,000 for illegally canceling a policy in September 2006. See California Regulators Slow to Enforce Insurance Laws Against Blue Cross/Blue Shield for more information. This ruling helped to motivate Blue Cross to settle more than 70 lawsuits brought by patients whose health coverage had been cancelled once they became seriously ill. Blue Shield has also been sued for illegally canceling policies. California’s Department of Managed Health Care continues to investigate additional claims against all three of these companies, the three largest providers in the state.
Kaiser Permanente 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]
These companies have cancelled health coverage for people with individual policies, often people who are self-employed. Insurers are not allowed to cancel coverage for people in group plans, but when people transfer from a group plan to some kind of individual plan, their coverage can be cancelled if they willfully intended to defraud or mislead the insurance company in their application for coverage. The insurance companies have interpreted this to mean that any slight omission or inaccuracy can be justification for cancellation. They have even argued that they don’t have to show an intent to deceive in order to cancel a policy. See Blue Cross and Blue Shield Policy Cancellation Practices Disproportionately Targets Individual/Independent Policies for more information.
The cancellation practice has been particularly controversial because the insurance companies had not been investigating the insurance applications at the time they were submitted. They waited until a patient had a serious medical problem requiring expensive care, and then reviewed the file for a reason to deny coverage. This raises serious public policy questions. The purpose of medical insurance is to provide coverage for people when they become seriously ill, but the insurance company activity is having the opposite effect for a significant number of people.
Consumer and patient advocates have argued that fines and orders to reinstate patients are not enough to deter insurance companies from this activity. It’s still cost effective for insurance companies to attempt to deny coverage. Advocates suggest that the right to revoke individual policies for fraud or deceit must be taken out of the hands of the insurance companies completely.
Kaiser Permanente 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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