[Kaiser's PR statement about halfway through this article is interesting, as usual, because of what it doesn't say. They only stopped illegally rescinding policies in 2006 because they were caught and fined for it. The DMHC is now conducting a more in depth investigation that will reveal the illegal practice for what it is: standard operating procedure at KP and most other insurers.]
From the AP via San Jose Mercury News:
3 insurance companies to have dropped policies reviewed
By SHAYA TAYEFE MOHAJER Associated Press Writer
LOS ANGELES–Three of the state’s largest health insurance companies could be forced to reinstate thousands of dropped policies after a state regulatory agency on Thursday ordered an independent review.
The Department of Managed Health Care ordered the review of dropped policies the last four years by Kaiser Permanente, Anthem Blue Cross and Blue Shield of California.
A partial review of the three companies found that 26 people had been improperly dropped, said agency director Cindy Ehnes. Their policies were ordered reinstated immediately, and the insurance companies were also ordered to reimburse medical costs incurred after their insurance was dropped.
The cases were found in a random review of 286 cases and were “so clearly wrong that they needed to be reinstated right away,” Ehnes said.
Ten were Kaiser Permanente customers, eight from Anthem Blue Cross and eight from Blue Shield of California.
In a statement, Anthem Blue Cross said, “It is important to clarify that the survey found only a relatively small number of rescissions reviewed were improper.”
Kaiser Permanente issued a similar release, adding that the company had suspended the practice of rescissions since October 2006, and was “awaiting clear guidelines from the state.”
The California Association of Health Plans, a trade association representing 40 full-service health plans, issued a statement saying many insurers had made efforts in recent years to self-regulate.
The trade association also noted that the threat of rescission is limited to the 2.6 million Californians who pay for their own coverage in individual plans, not those covered by their employers’ plans, Medicare, MediCal or other public programs.
Blue Shield declined further comment, saying they deferred to the trade association’s statement.
The regulatory agency’s announcement was applauded by Gov. Arnold Schwarzenegger, who pledged to work with legislators to “ensure this egregious practice is stopped.”
“It’s outrageous that innocent patients have to live in fear of losing their health care coverage,” said Schwarzenegger in a statement.
The order follows a Wednesday superior court filing by Los Angeles City Attorney Rocky Delgadillo, who said he would seek up to $1 billion in fines and restitution from Anthem Blue Cross for deceptive practices and unlawful termination of policies.
In recent months, the city attorney’s office sued another insurer, Health Net Inc., for allegedly canceling the policies of sick patients needing expensive treatment. As part of a separate suit, Health Net was ordered to pay $8.4 million in punitive damages to a woman whose policy was scrapped while she underwent treatment for breast cancer.