Blue Shield Of California

Two of California's largest insurers have been selling health coverage intended to be a safety net for the state's sick and jobless at premiums that exceed state-issued rates, in some cases by thousands of dollars a year. Two other companies -- Aetna and Health Net -- uniformly adhere to the state-issued rates. But a Times investigation found that Blue Shield of California's premiums are as much as 55% higher. And those charged by Anthem Blue Cross have been as much as 36% higher.

California has ousted Blue Shield, the state's second-largest not-for-profit health plan, from the state's high-risk medical insurance pool because its premiums were too high. The pool, known as the Major Risk Medical Insurance Program, or MRMIP, insures more than 6,700 Californians who have been shut out of the private health insurance market because of pre-existing conditions. Through MRMIP, such people are able to buy coverage from private insurers at premiums that are supposed to be 25% higher than the market rate for a comparable policy.

Anthem Blue Cross and Blue Shield -- two of the state's biggest health plans -- agreed Thursday to pay a total of $13 million in fines and to offer new health coverage to more than 2,200 Californians the companies dropped after they became ill. Neither company admitted to any wrongdoing in agreeing to pay the stiffest penalties yet in efforts by state authorities to curb what they view as an abusive practice of investigating and canceling policies after policyholders run up big medical bills.

The California Assn. of Realtors said Monday it had sued Blue Shield of California to stop the health plan from canceling its contract and dropping coverage for as many as 8,000 Realtors and family members. The flap is the latest example of how high health costs and changes in the marketplace are eroding the availability of group coverage. "We were abruptly notified -- by mail -- that our insurance coverage was being canceled," said association President Colleen Badagliacco.

A college student who was dropped by Blue Shield of California after he was hospitalized sued the health plan Thursday, asking a Los Angeles judge to order it to stop canceling the policies of people who get sick and submit claims for treatment. The request for a sweeping injunction is the latest twist in an escalating controversy over a practice that is widespread and has left thousands of California residents with big medical bills and without coverage.

A judge ruled Monday that Blue Shield of California could cancel group health insurance for the California Assn. of Realtors, apparently dooming it to the growing list of organization-sponsored health plans that have died in recent years, leaving people uninsured. The association had sued Blue Shield, alleging that it would be illegal for the insurer to cancel the coverage of more than 8,000 people, including real estate agents and family members.

A 2001 car accident that left Steven Hailey badly injured was the beginning of his continuing medical and financial calamity. While Hailey was still recovering in his Cypress home and with medical bills topping $450,000, Blue Shield of California suddenly canceled his coverage. That forced the former self-employed machinist to wait so long for surgery to repair an injured urethra, he says in a lawsuit against Blue Shield, that his bladder stopped working.

Every year, about 1.5 million Americans are diagnosed with cancer. Every year, they run up a medical tab estimated at $100 billion. Some of that money is spent on unnecessary hospitalizations and emergency room visits, which is why Blue Shield of California sends a nurse to Pamela Sprott's home in Valencia several days a week.

In a victory for consumers, a state appeals court Tuesday opened the way for class-action lawsuits against insurers that may have improperly dropped individuals for alleged errors and omissions on applications after medical claims had been submitted.

California's top insurance regulator has accused Blue Shield, one of the state's largest health plans, of 1,262 violations of claims-handling laws and regulations that resulted in more than 200 people losing their medical coverage. Calling the allegations "serious violations that completely undermine the public's trust in our healthcare delivery system and are potentially devastating to patients," Insurance Commissioner Steve Poizner said he would announce today that he would seek a $12.