Blue Shield to restore coverage for dropped Californians
In an attempt to settle investigations prompted by articles in The Times, the insurer agrees to reissue plans to almost 700 Californians and reimburse them for expenses that would have been covered.
Blue Shield has agreed to reissue medical coverage to nearly 700 Californians that the company dropped after they got sick and to make other changes in the way it handles insurance purchased by individuals, state officials said today.
Blue Shield of California's Life & Health Co. also agreed to reimburse consumers whose policies it canceled for medical expenses they paid out of pocket. The deal applies to people who lost coverage from Jan. 1, 2004 through May 31, 2008.
The deal is the latest between state regulators and health insurers that attempts to settle investigations prompted by a series of articles in The Times examining rescission, the controversial practice of canceling policyholders after they get sick.
Most of the state's major health insurers remain mired in litigation over the practice that led to the cancellation of thousands of policies of sick patients, as well as financial losses for them, physicians and hospitals. In addition, Los Angeles City Atty. Rocky Delgadillo is looking into the rescission practices of several insurers.
Insurance Commissioner Steve Poizner said he hoped the settlement would "make whole" 678 consumers dropped by Blue Shield and "put an end to rescission practices that were hurting consumers."
"People pay their insurance premiums and expect to be taken care of," Poizner said. "Canceling someone's insurance can have devastating medical, emotional and financial impacts. I will continue to take action against those insurers who do not live up to their agreements."
Duncan Ross, president of the involved Blue Shield unit, said the company was pleased with the agreement.
"With this settlement, we can put these matters to rest and enter 2009 with new procedures in place to clarify the responsibilities of insurers and our customers in the future," Ross said in a statement.
Under the deal, Blue Shield will immediately offer new coverage to the consumers whose policies were canceled and pay back any medical expenses that would have been covered under their old policies. Any disputes over such payments will be submitted to an arbitrator.
Blue Shield also agreed to change its application forms, as well as the underwriting process by which it decides whom to accept for coverage.
If the company fails to make corrections within a prescribed time frame, it could be subjected to penalties of up to $5 million.
The deal is similar to those reached by the state Department of Managed Health Care last year with major health insurers. Those settlements have been sharply criticized by consumer advocates and policyholder lawyers as weak and ineffective.
lisa.girion@latimes.com
