State regulators for the first time have ordered a health plan to reinstate the insurance coverage of a patient whose policy was ruled to have been illegally canceled.
In an order posted Wednesday, the Department of Managed Health Care ruled that Kaiser Foundation Health Plan illegally canceled coverage for a Northern California woman in urgent need of medical attention for large kidney stones. The cancellation was illegal, the agency ruled, because there was no evidence the woman intended to deceive the health maintenance organization about her medical history.
The agency's action is the latest salvo in a growing controversy over cancellations of individual health insurance policies that have saddled patients with huge medical bills. With the order against Kaiser, all three of the state's largest health plans are now embroiled in the controversy.
Blue Cross of California, owned by Indianapolis-based WellPoint Inc., recently settled more than 70 lawsuits and claims filed by patients who accused the state's largest health insurer of illegally canceling their coverage after they got sick. Suits have also been filed against Blue Shield of California.
The agency's action against Kaiser was the second time in less than a month -- and only the second time ever -- that it has sided with a consumer in a cancellation case. In the first case, the agency fined Blue Cross $200,000 after finding it had illegally rescinded a Southern California woman's policy, but it did not order her coverage reinstated.
The agency is investigating several complaints of improper cancellations against Kaiser. But, until the latest reinstatement order, the agency had issued no findings against the HMO in a cancellation case.
The Northern California woman's case provides the first details to come to light of a Kaiser cancellation and illustrates the perils of replacing group health coverage with individual insurance. Unlike with group plans, insurers can deny individual policies to consumers with preexisting medical conditions or other health problems.
The woman and her family had Kaiser coverage through her employer for 20 years. When she left her job, the family purchased from Kaiser a continuation plan commonly known as COBRA that is protected by a federal law. After that expired, the woman and her family bought individual coverage from Kaiser.
