Anthem settles with California insurance department over coverage rescissions

WellPoint's California subsidiary Anthem has agreed to pay state regulators at the California Dept. of Insurance a $1 million fine and offer restored coverage to 2,230 people whose policies the company revoked over the last four years. It did not admit guilt.

Anthem, formerly Blue Cross of California, was among several California insurers who were accused of improperly rescinding members' individual insurance policies when the members ran up costly claims. In addition to the fine, Anthem agreed to pay medical bills for the former policyholders and to change its application and underwriting processes.

Anthem previously settled with the state Dept. of Managed Health Care, which regulates HMOs, agreeing to pay a $10 million fine and reinstate 1,770 former members, though not admitting wrongdoing. The Dept. of Insurance regulates PPOs and other insurance products.

Anthem still faces a lawsuit from Los Angeles City Attorney Rocky Delgadillo related to the rescissions.

Meanwhile, Los Angeles-based insurer Health Net reached a settlement with Delgadillo in February will mean thousands of dollars in restitution for people who lost coverage when the company rescinded their health insurance.

Health Net has previously settled with the Dept. of Managed Health Care and the Dept. of Insurance over the same issue, agreeing to pay a combined $3.9 million fine, extend coverage to people whose policies were rescinded and pay past medical bills.

Health Net also agreed to adopt a corporate compliance program to prevent any future improper rescissions, pay a $2 million fine and give $500,000 to a cancer charity. In both cases, Health Net did not admit wrongdoing.

Note: This item originally appeared at http://www.ama-assn.org/amednews/2009/02/23/bibf0223.htm.