Insurer fined for dropping members
NEWS IN BRIEF — Posted April 9, 2007
Blue Cross of California was fined $1 million for rescinding individual health insurance policies in violation of state law, according to the California Dept. of Managed Health Care.
The department conducted a survey of randomly selected individual health insurance policies that were cancelled by Blue Cross of California, a division of Indianapolis-based WellPoint, from 2004 to 2006. The survey results, released March 22, revealed two instances in which the health plan violated state law.
According to the survey, there was no evidence that the insurer conducted a complete pre-enrollment investigation of the applicant's medical history or used its own policies before issuing coverage in 39 of 90 cases reviewed. In the second instance the Dept. said Blue Cross violated state law in all 90 cases reviewed when the insurer did not prove the applicant willfully misrepresented his or her medical history before the coverage was dropped.
Blue Cross said it denies the department's charges and would contest the fine.
This isn't the first time that the plan has been fined over rescissions. In September 2006, it was fined $200,000 for rescinding the policy of one its members in violation of state law, according to the managed care department. Blue Cross denied that charge, and is contesting that fine as well.
Note: This item originally appeared at http://www.ama-assn.org/amednews/2007/04/09/bibf0409.htm.