Claims WellPoint subsidiary Blue Cross of California canceling health insurance illegally

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CBS-TV Evening News

BOB SCHIEFFER, anchor: It is not just the oil companies that are making big profits these days. The nation’s largest health insurance company WellPoint reported today its first quarter profits shot up 20 percent. Critics say that is partly because at least one WellPoint subsidiary Blue Cross of California is illegally canceling policies. Here’s Sandra Hughes with more.

SANDRA HUGHES reporting: When Dawn Foiles and her husband bought health insurance from Blue Cross of California they never imagined they’d have a problem. Then, in 2003, she was told she needed back surgery.

Ms. DAWN FOILES: Blue Cross authorized the surgery that I needed to have.

HUGHES: When Foiles first applied for her policy, she disclosed she’d had prior back surgery. But months after that second surgery in 2003, with $100,000 in bills, Blue Cross canceled her policy, claiming they didn’t know about her preexisting condition.

Ms. FOILES: They retroactively canceled us which meant all the money that they had paid out, even after authorizing the surgery, they wanted back.

HUGHES: Today in Los Angeles, lawyers filed 13 lawsuits alleging Blue Cross‘ parent company, WellPoint, illegally canceled policies. Ten similar cases were filed two weeks ago.

Mr. JERRY FLANAGAN (Foundation for Taxpayer & Consumer Rights): The law is very clear. The only way an insurance company can revoke coverage after the fact is if the individual on purpose hid a past medical condition.

HUGHES: But according to court documents, Blue Cross doesn’t ask whether a person intentionally hid their condition or left it out by accident before canceling the policies. A Blue Cross employee acknowledges, “We never look at those factors.” WellPoint says in all but Dawn Foil’s case, patients did not disclose preexisting conditions. Not according to Howard Bowlinger, who says when he applied for Blue Cross insurance, he revealed he had blood in his urine. Later, after his prostate cancer was diagnosed, Blue Cross yanked his coverage in the middle of treatment, saying he had never disclosed his previous symptoms.

Mr. HOWARD BOWLINGER: Now I have this $35,000 hospital bill and how am I going to pay for radiation that is 15,000 or 20,000?

HUGHES: Another Blue Cross employee said in a deposition the company has a team reviewing 1500 cases per week for retroactive cancellation. But Blue Cross said today the company acted appropriately and lawfully and only canceled coverage based on fraud or misrepresentation. Sandra Hughes, CBS News, Los Angeles.

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