Urges State HMO Regulator To Do Same
Santa Monica, CA — Consumer Watchdog today joined L.A. City Attorney Rocky Delgadillo in announcing the city’s lawsuit alleging that health insurer Blue Cross engaged in unfair business practices by illegally cancelling the health insurance of patients after they got sick.
The practice — known as "rescission" — has affected at least hundreds of patients who have been left uninsured, uninsurable, and facing up to hundreds of thousands of dollars in medical debt when their polices were retroactively cancelled by their health insurance company.
On Monday, Consumer Watchdog sent a letter to Department of Managed Health Care (DMHC) Director Cindy Ehnes giving the DMHC 10 days to make a decision about whether it would require immediate reinstatement in scores of cases where the agency has already found the policy rescissions to be illegal. Read Consumer Watchdog’s letter citing the DMHC’s legal authority and duty to require reinstatement of coverage.
In the letter sent yesterday, Consumer Watchdog wrote:
"Rescission of a health plan contract is extremely detrimental to the patient. Not only is the rescinded patient left uninsured and often hundreds of thousands of dollars in medical debt, but is also virtually uninsurable in the individual market. Particularly harmful is the fact that a patient rescinded under an allegation of fraud is barred from enrolling in high-risk coverage through the [state of California] Major Risk Medical Insurance Program (MMRMIP). As result, patients who have been wrongly rescinded are forced to rely on charity care and the state’s underfunded health care safety net."
Consumer Watchdog said that reinstatement must be retroactive to the time of cancellation and health insurers must be liable for all health expenses from the date of issuing the contract through the date of reinstatement.
Consumer Watchdog petitioned the DMHC 18 months ago to adopt new regulations to rescission and to require health plans to reinstate cancelled patient. To date, the DMHC has reinstated only one Kaiser patient.
Click here for more information on health insurance rescission.
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