Santa Monica, CA — In response to mounting criticism over illegal cancelations of health insurance policies, the Foundation for Taxpayer and Consumer Rights (FTCR) filed a petition with state regulators calling for new rules to make it harder for insurers to cancel coverage when patients get sick. California’s top HMO regulator, the Department of Managed Health Care, responded to FTCR’s petition by saying that it would pursue new regulations, a process which includes a requirement for public hearings, but did not provide details of the proposal.
“We are happy to hear that regulators are going to crack down on insurers who pull the rug out from under patients when they need coverage the most.  Absent specific rules, it is clear that insurers will continue to flout the law. It is good news that the department sees the need for new rules, but those rules must be clear and comprehensive,” said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights (FTCR). “We appreciate the opportunity to hold public hearings and discuss the new rules, but the devil’s in the details and we’ll be watching to make sure patients get the protections they need.”
Read FTCR’s petition providing a detailed analysis of the state’s authority to issue new rules and how the new rules should work:Â
http://www.ConsumerWatchdog.org/resources/rescissionspetition.pdf.
In the petition filed yesterday, FTCR wrote:
“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 canceling policies unless patients are shown to have made intentional misrepresentations.”Â
“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 protecting patients from unfair cancellations of coverage, 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. Penalties and fines for each illegal cancellation.
– 30 –
The Foundation for Taxpayer and Consumer Rights (FTCR) is California’s leading public interest advocacy group.
