CA Legislature Passes Historic Health Insurance Cancellation Bill

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Nurses & Consumers Urge Schwarzenegger to Keep His Promise To Protect Innocent Patients and Sign The Bill 

SACRAMENTO, CA — The California State Legislature today approved a historic measure to protect innocent patients from retroactive cancellations of their health coverage after they become ill and file an insurance claim.  The bill now goes to Governor Schwarzenegger’s for a signature.
AB 1945 by Assemblyman Hector De La Torre (D-South Gate) comes in response to widespread news coverage of insurers violating state law by using innocent omissions on an insurance application to cancel coverage after a patient falls ill. Existing statutes state that patients may not be canceled except for lying about their medical history on an enrollment application, and AB 1945 reinforces the law.
"Canceled patients are left uninsured, uninsurable and often hundreds of thousands of dollars in debt while facing ongoing medical treatment," said Jerry Flanagan, Health Care Policy Director for Consumer Watchdog.  "This bill sends a clear message that canceling innocent patients is not acceptable."

The key element of AB 1945 is a provision that states that a patient’s health coverage cannot be rescinded unless the patient intentionally misrepresented or intentionally omitted health information on his or her application for coverage. The bill also establishes a process for patients to appeal rescissions to an independent review panel and requires insurers to continue to pay for health care services unless the independent review panel agrees that a patient lied about a health condition on the application.  The bill also preserves a patient’s right to take the insurance company to court.

"RNs see the damage done to patients every day by insurance companies,” said Malinda Markowitz, RN President.  “The governor should keep his promises to protect innocent patients and sign the bill."

On numerous occasions Gov. Schwarzenegger has promised to protect innocent patients from rescission of health insurance policies:
– "[It is] outrageous that innocent patients have to live in fear of losing their health care coverage. I look forward to working with my partners in the Legislature to ensure this egregious practice is stopped." Sacramento Bee, “Patients gain a victory; 
Insurance reinstated for some; thousands more get reviews,” April 18, 2008.
– “As I’ve said before, patients should not live in fear of unfairly losing their healthcare coverage when they need it most — and I look forward to working with the Legislature to ensure this egregious practice is put to an end.” Los Angeles Times, “State fines 2 health plans over canceled coverage; Anthem Blue Cross and Blue Shield agree to offer new policies,” July 18, 2008.
– "Until we achieve comprehensive healthcare reform, stopping unfair healthcare rescissions is an urgently needed consumer protection. This terrible practice further illustrates the erosion of our healthcare system and the need for comprehensive healthcare reform. Today we are standing up for consumers by putting an end to a deplorable practice, and I will continue working with my partners in the Legislature to stop unfair healthcare rescissions once and for all." Los Angeles Times, “Bonuses for cutting coverage is banned,” July 23, 2008.

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Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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