Los Angeles, CA — Patients whose health care policies were retroactively canceled when they got sick, leaving them uninsured, uninsurable and hundreds of thousands of dollars in debt, will urge state regulators today at a public hearing in Los Angeles to implement tough new rules on health insurers.
Sal D’Anna’s insurer, PacifiCare, cancelled his coverage when he got kidney cancer, claiming D’Anna had failed to disclose his disease when he enrolled.Â However, D’Anna did not find out that he had cancer until after the insurance coverage began.Â As a result of PacifiCare’s illegal cancellation of coverage, D’Anna was left to pay for a $65,000 surgery on his own.Â Click here to read more about D’Anna.
The public hearing today was convened by the Department of Managed Health Care (DMHC) to create new rules to ban the practice of canceling coverage when patients get sick. The Foundation for Taxpayer and Consumer Rights (FTCR), which petitioned for new the rules, welcomed the opportunity to put an end to the anti-consumer practice.Â The hearing will begin at 1:00 pm today in the Junipero Serra Building in downtown Los Angeles located at 320 W. Fourth Street.
“It is good news that regulators are going to crack down on insurers who pull the rug out from under patients when they need coverage the most leaving them uninsured and bankrupt.Â Without specific rules, it is clear that insurers will continue to flout the law. Insurance isn’t insurance if you can’t count on it to provide coverage when you get sick,” said Jerry Flanagan of FTCR. “California patients are at the mercy of profiteering HMOs and insurance companies that drop patients to boost their bottom line.”
Consumer advocates said that new regulations and other actions are necessary because Blue Cross, Kaiser, Blue Shield, Health Net, PacifiCare and likely others are illegally revoking health care polices when patients get sick. The overwhelming evidence demonstrates a routine and flagrant violation of state law that bars insurance companies from retroactively canceling policies.
“The only thing these health insurance companies are ensuring is that the consumers who buy these empty promises will end up with bills they cannot pay,” said Jen Flory, an attorney at the Western Center on Law & Poverty.
FTCR said that there are huge financial incentives for insurers to revoke coverage when patients are hit with big medical bills.
For example, Blue Cross of California, one health insurer against whom hundreds of patient complaints have been filed, paid $1.4 billion in shareholder dividends to its parent company since 2002.Â Read Blue Cross financial documents showing transfer of $1.4 billion in shareholder dividends since 2002.
Currently insurers cancel coverage due to so-called “omissions” on a patient’s enrollment application –Â induced by the intentionally vague and misleading questions on the applications — regardless of whether patients intentionally misrepresented their medical histories.Â According to depositions in previous cases against Blue Cross, 1,500 policies were reviewed each week by the insurer’s “retroactive review department” which was dedicated to finding reasons to cancel policies.
In the petition to the DMHC calling for the new rules, FTCR wrote:
“Insurance companies and HMOs are preying on the 2 million to 3 million Californians currently enrolled in individual policies. The companies know those consumers have no employer to protect them and no ally when they are sick and need coverage the most. The companies also know that for many, legal action, including a lawsuit, is not a realistic remedy when facing large, unpaid medical bills.
In addition to new regulations banning so-called “retro-active rescissions” and “postclaims underwriting,”
FTCR called for:
1. Full investigations of all cancellation complaints.
2. Clear and unambiguous insurance enrollment applications.
3. Regulations to remove financial incentives for illegal rescissions.
4. Additional penalties and fines for the illegal cancellations.
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FTCR is California’s leading public interest watchdog organization. For more information, visit us on the web at: http://www.ConsumerWatchdog.org.