Lawsuits Claim Health Insurance Companies Illegally Canceled Policies

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NBC-TV4 Los Angeles

LOS ANGELES, CA — Thirteen more lawsuits were filed Thursday in Los Angeles alleging that major health insurance companies illegally canceled policies for patients already approved for medical treatments.

The lawsuits against WellPoint, its subsidiary, Blue Cross of California, and Blue Shield, build on 10 similar lawsuits filed against the companies three weeks ago by attorney William Shernoff on behalf of his clients.

According to the complaints, the insurers have created “retroaction review” departments whose sole purpose is to terminate policies for patients who had previously been given approval for medical treatments.

“Thousands of thousands of people are affected by this,” Shernoff said.

Messages left today with representatives for Indianapolis-based WellPoint and Blue Shield of California, which is headquartered in San Francisco, were not immediately returned.

WellPoint spokesman Robert Alaniz told the Los Angeles Times earlier this week that his company has done nothing wrong.

“We do not rescind coverage based on someone having a diagnosis or receiving services,” he said. “We rescind based on misrepresentations in an application that we discover. We believe that we are acting appropriately and consistent with our legal obligations to our members.”

Shernoff contends the insurers are going too far.

After a patient files a claim, the insurance company re-examines the application to try to find any omissions or inconsistencies, he said.

Patients then get dumped for inconsistencies — not fraud, as is required by the law, according to The Foundation for Taxpayer and Consumer Rights, a consumer watchdog group that is supporting the litigation.

“This is a national problem,” said FTCR’s Jerry Flanagan. “Insurance companies sell you a policy and then they break their promises and they cherry-pick and only insure those that are healthy. Dare you get sick, your coverage is revoked. This makes a mockery of health insurance.”

Michael Norris of Los Angeles said he was left with more than $20,000 in medical bills when Blue Cross retroactively canceled his 5-year-old son’s coverage following an approved surgery to remove his adenoids.

Blue Cross said the application was incomplete, Norris said.

“I filled out the application to the best of my ability,” he said.

“There are many, many questions,” he added. “I did the best as I could with my son’s health situation. They had access to all his medical records. They paid for everything prior to that, but when the bill came to them, they took a step back and denied the claim.”

He said Blue Cross has refunded some of the premiums he had paid.

“They’ve refunded about 60 percent of what I paid, and then they back- charged all the previous charges back to my doctors, who then rebilled them to me, so it’s quite a frustrating situation,” Norris said.

Plaintiff Parvin Mottaghi of Glendale alleges she has $700,000 in bills after Blue Shield canceled her policy following an approved open-heart surgery by claiming the application was incomplete. She is now uninsured.

Insurance is supposed to give the policyholder “peace-of-mind,” she said.

“Now, not only I don’t have peace-of mind — every day I’m worried about my situation,” said Mottaghi, who claims she filled out her application correctly.

“I’m praying every day to win this case,” she said.

Consumer Watchdog
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