State to Restore Health Coverage to Some Patients Who Were Illegally Canceled

Published on

The Schwarzenegger administration will announce tomorrow that it is reinstating health insurance for some patients whose coverage was illegally canceled by health insurance companies.

Details of the decision will be announced at a morning press conference held by the state Department of Managed Health Care, said department spokeswoman Lynne Randolph.

Earlier this month, Capitol Weekly reported on 90 cancellation complaints filed against Blue Cross that were reviewed by state regulators. The department found that all 90 cancellations were illegal, but did not exercise its authority to reinstate health insurance for those enrollees.

The scope of the state’s authority to reinstate coverage was not widely known until March 27, when the Senate Health Committee held a wide-ranging hearing on managed-care issues.

"I’m delighted to hear there will be reinstatemrent and I praise the department for taking this action," said Sen. Sheila Kuehl, D-Santa Monica, the committee chairwoman. "It’s hard to catch up once you’ve been rescinded. I’m not sure what the department is going to do for those people, but I hope some attention will be paid to that."

Jerry Flanagan, a consumer activist with Consumer Watchdog (formerly the Foundation for Taxpayer and Consumer Rights), has led the call for the department to reinstate those whose coverage has been illegally rescinded. He said he was eager to see the details of the department’s announcement.

"The key thing is, the department’s definition of reinstatement has meant the plan doesn’t have to pay for any of the medical expenses between the time of the rescission and the reinstatement. It’s really critical for what they are calling reinstatement. The statute’s really clear that it has to be retroactive to the date of rescission and that the plan has to pay for all the medical costs that have been incurred."

Flanagan said he was "hopefully optimistic that the department is going to side with patients — that reinstatement means full payment for past coverage."

Randolph said Thursday’s announcement will require reinstatement for more than just Blue Cross customers. The department is wrapping up investigations of the rescission plans of four other health plans. Randolph said those reports would not be released Thursday, but that the reinstatement announcement is meant to be part of a corrective action plan stemming from those investigations.

The press conference comes a day after Los Angeles City Attorney Rocky Delgadillo filed a civil suit against Blue Cross alleging that insurance company illegally canceled the health insurance of patients only after they got sick.

"Blue Cross has stacked the deck against California consumers," Delgadillo said Wednesday.

The mounting media and political pressure was among the factors that has motivated the Schwarzenegger administration to act quickly. The Department of Managed Health Care has been working with industry officials for weeks to try to come up with a change in the health plans’ rescission procedures.

The department has jurisdiction over most HMOs in the state. Most individual insurance plans are regulated by the Department of Insurance. Late Wednesday, Insurance Commissioner Steve Poizner said health plans should be made to pay for illegally canceling patients’ coverage.

"The practice of rescinding health insurance only after a claim has been filed based on an insurer’s failure to do its due diligence before issuing the policy is illegal and deplorable," he said. " I have put the health insurance industry on notice that I will not tolerate illegal rescissions or any detrimental treatment of policyholders with legitimate claims."

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases