The insurance industry defends cancellations as necessary protection against fraud by those applying for coverage. Abuses skew the assessment of how risky and expensive it will be to cover someone and raise prices for honest customers, according to the insurers.
Consumers have said that confusing application forms used by some insurers elicited incomplete disclosures that could be used later to justify cancellations.
Aetna has hired independent review company MCMC of Boston to perform more than 40,000 reviews of medical bills and services each year.
Investigators in California have focused much of their attention on Health Net Inc. of Woodland Hills. On Sept. 12, the insurer settled a state probe by reinstating 926 sick customers, covering $14.2 million in medical bills and paying a $3.6-million fine.
Health Net paid a $1-million fine last year after California discovered it had been financially rewarding workers who found reasons to drop policyholders who had become ill. A judge in February ordered the company to pay $9.4 million to a hair stylist whose coverage was canceled while she was undergoing treatment for breast cancer.
The other companies that reached settlements are the PacifiCare unit of UnitedHealth Group Inc. of Minnetonka, Minn., the largest U.S. health insurer, and two nonprofit insurers, San Francisco-based Anthem Blue Shield of California and Kaiser Permanente of Oakland.
Aetna hasn't been embroiled in regulatory actions over rescissions because it is careful to investigate applications before granting coverage, said company spokesman Mohit Ghose.
