LA City Attorney Sues Blue Shield: Penalties May Exceed $1B
Los Angeles City Attorney Rocky Delgadillo has brought a lawsuit against California Physicians’ Service, Inc. who does business as Blue Shield of California and its subsidiary, Blue Shield of California Life and Health Insurance Company for engaging in unlawful and deceptive business practices that could lead to over $1 billion in penalties.
Specific allegations
According to a press release from Delgadillo’s office, the lawsuit was filed on behalf of the People of the State of California against the insurers for, “engaging in unlawful and deceptive business acts and practices, which have led to the denying or delaying of authorization for thousands of health insurance claims or the rescinding of coverage after initially issuing a policy.”
Over 400,000 policyholders may be affected
Delgadillo’s office estimates that over 400,000 policyholders may have been subject to false and misleading advertising from the company’s use of application forms that were intentionally misleading and were not reviewed or investigated by the company before policies were issued. The practice, known as rescission, has been a source of controversy for the insurance industry as a whole, but an issue that California regulators – and the Los Angeles City Attorney – are addressing more than any other state. City Attorney Delgadillo is certainly on role. Earlier this year, he brought similar lawsuits against HealthNet and Anthem Blue Cross.
Rescission: Defined
Rescission occurs when an insurance company writes a policy, and takes your premium, without ever reviewing or investigating the information you provide. However, when you make a claim, they go back and review the information and find a reason to rescind the policy so that you end up without any insurance – usually when you need it most. The practice is not only illegal, but devastating to policyholders. Rescission equates to fraudulent behavior, so when one carrier rescinds your insurance policy, other insurers won’t likely cover you.
If you’ve been denied a valid insurance claim, your carrier may have acted in bad faith. If you would like to contact an experienced lawyer whose practice focuses in this area of the law, please click here. Consultations are free, without obligation and are strictly confidential.
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