"If they can mislead the Department of Managed Health Care, can you imagine how misleading they can be to their policyholders?"...State regulators fined WellPoint Inc., the parent of Blue Cross of California, $1.2 million and Kaiser Permanente $325,000 for improperly canceling policies. Investigations continue for Kaiser, Health Net, PacifiCare and Blue Shield of California.
Health Net punished for lying about contract cancellation bonuses
Victoria Colliver
San Francisco Chronicle Staff Writer
November 16, 2007
State health regulators fined Health Net Inc. $1 million Thursday for lying to investigators about paying employees bonuses based on the number of contracts they canceled after those policyholders got sick.
The penalty was the first levied on a health insurer for withholding information about incentives given to its employees.
Health Net, along with other major health insurers, is being investigated for combing through applications of members after they have filed claims to find mistakes or omissions that would justify revoking policies. Insurers say they resort to rescinding policies only when members lie about their health histories, but consumers say the questionnaires often are vague and misleading.
As part of the investigation, state regulators asked Health Net officials on two separate occasions whether the company gave financial bonuses to its employees for rescinding policies. State law prohibits tying compensation to claims decisions. Both times, plan officials denied doing so.
"The health plans say they have to rely on applicants being truthful and fully disclosing their medical conditions. And if they aren't truthful, there are very hard consequences," said Cindy Ehnes, head of the state Department of Managed Health Care. "As a regulator, I have to rely on that same truthfulness and full disclosure by the companies we regulate."
The company's practices came to light last week when a Southern California judge allowed documents to be made public that showed a Health Net analyst received more than $21,000 in bonuses from 2000 to 2006, based at least partly on meeting or exceeding the company's rescission goals. Health Net claimed to have saved $35.5 million in "unnecessary" care for rescinding more than 1,000 policies during that time frame, documents showed.
Health Net executives apologized Thursday for "any misunderstanding" with the state regulators. The company, based in Woodland Hills (Los Angeles County), accepted a consent agreement and promised to stop compensation practices linked to rescission.
The documents were submitted in an arbitration hearing involving Patsy Bates, a 51-year-old hairdresser from Gardena (Los Angeles County), who is suing Health Net for $6 million plus punitive damages for canceling her policy after she was diagnosed with breast cancer. The company said she lied about her weight and failed to disclose a heart condition.
Claremont attorney William Shernoff, who is representing Bates, called the fine appropriate.
"If they can mislead the Department of Managed Health Care, can you imagine how misleading they can be to their policyholders?" Shernoff said. The hearing in Rancho Cucamonga (San Bernardino County) is expected to conclude Friday.
State regulators fined WellPoint Inc., the parent of Blue Cross of California, $1.2 million and Kaiser Permanente $325,000 for improperly canceling policies. Investigations continue for Kaiser, Health Net, PacifiCare and Blue Shield of California.
Showing posts with label canceling policies. Show all posts
Showing posts with label canceling policies. Show all posts
Wednesday, November 2, 2011
Saturday, February 23, 2008
Health Net ordered to pay $9 million for canceling coverage during cancer treatment
The punitive damage award is the first of its kind and has prompted the giant medical insurer to scrap practices that have recently come under fire.
By Lisa Girion
Los Angeles Times
February 23, 2008
One of California's largest for-profit insurers stopped a controversial practice of canceling sick policyholders Friday after a judge ordered Health Net Inc. to pay more than $9 million to a breast cancer patient it dropped in the middle of chemotherapy.
The ruling by a private arbitration judge was the first of its kind and the most powerful rebuke to the state's major insurers whose cancellation practices are under fire from the courts, state regulators and elected officials.
Calling Woodland Hills-based Health Net's actions "egregious," Judge Sam Cianchetti, a retired Los Angeles County Superior Court judge, ruled that the company broke state laws and acted in bad faith.
"Health Net was primarily concerned with and considered its own financial interests and gave little, if any, consideration and concern for the interests of the insured," Cianchetti wrote in a 21-page ruling.
Patsy Bates, a 52-year-old grandmother, was at work at the Gardena hair salon she owns when her lawyer William Shernoff called with the news. Bates said she screamed and thanked the lawyer.
Then, "I thanked God," she said. "I praised the Lord."
Bates called the arbitration judge "an angel . . . a real stand-up kind of judge."
When Health Net dropped her in January 2004, Bates was stuck with more than $129,000 in medical bills and was forced to stop chemotherapy for several months until she found a charity to pay for it.
Health Net Chief Executive Jay Gellert ordered an immediate halt to cancellations and told The Times that the company would be changing its coverage applications and retraining its sales force.
"I felt bad about what happened to her," he said. "I feel bad about the whole situation."
Gellert said he would move quickly to "give people the confidence that they can count on their policy." Specifically, he pledged to stop all cancellations until an external review process could be established to approve all cancellations.
Other insurers were considering changing their own practices. A spokeswoman for WellPoint Inc., which operates Blue Cross of California, the state's largest for-profit insurer, said the company was in favor of such an idea. Blue Shield of California declined to comment.
Until Friday, the companies had uniformly defended cancellations, saying they were necessary to hold down costs by weeding out people who may have failed to disclose pre-existing conditions on applications for coverage. They say cancellations happen infrequently.
The judge's strong denunciation of the way Health Net carried out Bates' cancellation and big money award stunned and pleased regulators and patient advocates.
State Insurance Commissioner Steve Poizner applauded the judge, saying "health insurers simply cannot hold out the promise of insurance for their consumers and then snatch it away just when people need it most. That is illegal, immoral and will not be tolerated."
Earlier, Health Net had defended its actions, saying it never would have issued Bates a policy in the first place if she had disclosed her true weight and a preexisting heart condition on her application.
Bates said a broker filled out the application while she was styling a client's hair on a busy day in her shop. She said she answered his questions as best she could.
Bates said she already had insurance and wasn't in the market until the broker came by and told her that he thought he could get her a lower monthly premium if she switched to Health Net.
At the arbitration hearing, internal company documents were disclosed showing that Health Net had paid employee bonuses for meeting a cancellation quota and for the amount of money saved.
"It's difficult to imagine a policy more reprehensible than tying bonuses to encourage the rescission of health insurance that keeps the public well and alive," the judge wrote.
http://www.latimes.com/features/health/la-fi-insure23feb23,1,2680255.story
By Lisa Girion
Los Angeles Times
February 23, 2008
One of California's largest for-profit insurers stopped a controversial practice of canceling sick policyholders Friday after a judge ordered Health Net Inc. to pay more than $9 million to a breast cancer patient it dropped in the middle of chemotherapy.
The ruling by a private arbitration judge was the first of its kind and the most powerful rebuke to the state's major insurers whose cancellation practices are under fire from the courts, state regulators and elected officials.
Calling Woodland Hills-based Health Net's actions "egregious," Judge Sam Cianchetti, a retired Los Angeles County Superior Court judge, ruled that the company broke state laws and acted in bad faith.
"Health Net was primarily concerned with and considered its own financial interests and gave little, if any, consideration and concern for the interests of the insured," Cianchetti wrote in a 21-page ruling.
Patsy Bates, a 52-year-old grandmother, was at work at the Gardena hair salon she owns when her lawyer William Shernoff called with the news. Bates said she screamed and thanked the lawyer.
Then, "I thanked God," she said. "I praised the Lord."
Bates called the arbitration judge "an angel . . . a real stand-up kind of judge."
When Health Net dropped her in January 2004, Bates was stuck with more than $129,000 in medical bills and was forced to stop chemotherapy for several months until she found a charity to pay for it.
Health Net Chief Executive Jay Gellert ordered an immediate halt to cancellations and told The Times that the company would be changing its coverage applications and retraining its sales force.
"I felt bad about what happened to her," he said. "I feel bad about the whole situation."
Gellert said he would move quickly to "give people the confidence that they can count on their policy." Specifically, he pledged to stop all cancellations until an external review process could be established to approve all cancellations.
Other insurers were considering changing their own practices. A spokeswoman for WellPoint Inc., which operates Blue Cross of California, the state's largest for-profit insurer, said the company was in favor of such an idea. Blue Shield of California declined to comment.
Until Friday, the companies had uniformly defended cancellations, saying they were necessary to hold down costs by weeding out people who may have failed to disclose pre-existing conditions on applications for coverage. They say cancellations happen infrequently.
The judge's strong denunciation of the way Health Net carried out Bates' cancellation and big money award stunned and pleased regulators and patient advocates.
State Insurance Commissioner Steve Poizner applauded the judge, saying "health insurers simply cannot hold out the promise of insurance for their consumers and then snatch it away just when people need it most. That is illegal, immoral and will not be tolerated."
Earlier, Health Net had defended its actions, saying it never would have issued Bates a policy in the first place if she had disclosed her true weight and a preexisting heart condition on her application.
Bates said a broker filled out the application while she was styling a client's hair on a busy day in her shop. She said she answered his questions as best she could.
Bates said she already had insurance and wasn't in the market until the broker came by and told her that he thought he could get her a lower monthly premium if she switched to Health Net.
At the arbitration hearing, internal company documents were disclosed showing that Health Net had paid employee bonuses for meeting a cancellation quota and for the amount of money saved.
"It's difficult to imagine a policy more reprehensible than tying bonuses to encourage the rescission of health insurance that keeps the public well and alive," the judge wrote.
http://www.latimes.com/features/health/la-fi-insure23feb23,1,2680255.story
Friday, December 21, 2007
Blue Shield Illegally Canceling Policies
Blue Shield Illegally Canceling Policies
Working Californians
The WC Blog
posted by Julia Rosen | 12.13.07
Illegally canceling health care policies is stock and trade for the industry. Their competitor Blue Cross was already fined $1 million by the state in March and Health Net faced a massive court case for doing the same thing. There are lots of reasons why our health care system is a mess and this is one of them. LAT:
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 $12.6-million fine.
http://workingcalifornians.com/blog/julia_rosen
Each one of those cases is a person who had insurance and got sick. They filed for payments authorized by their coverage and Blue Shield said no and attempted to cancel their policies. These sick people then had to fight tooth and nail to get the payment to their doctors so they would not be liable for the bill. In over 200 of those cases they lost and the companies dropped them completely from coverage. Of course that means that they then have a pre-existing condition and thus would have a next to impossible time getting coverage from another company.
It is a disgusting practice that is all about trying to squeeze out a few more dollars in profits. It is illegal and I am glad to see the state launching the investigation and moving to fine them. It sure would be nice if that dissuaded the companies from trying this in the first place, but I don't hold out that much hope that it will.
Working Californians
The WC Blog
posted by Julia Rosen | 12.13.07
Illegally canceling health care policies is stock and trade for the industry. Their competitor Blue Cross was already fined $1 million by the state in March and Health Net faced a massive court case for doing the same thing. There are lots of reasons why our health care system is a mess and this is one of them. LAT:
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 $12.6-million fine.
http://workingcalifornians.com/blog/julia_rosen
Each one of those cases is a person who had insurance and got sick. They filed for payments authorized by their coverage and Blue Shield said no and attempted to cancel their policies. These sick people then had to fight tooth and nail to get the payment to their doctors so they would not be liable for the bill. In over 200 of those cases they lost and the companies dropped them completely from coverage. Of course that means that they then have a pre-existing condition and thus would have a next to impossible time getting coverage from another company.
It is a disgusting practice that is all about trying to squeeze out a few more dollars in profits. It is illegal and I am glad to see the state launching the investigation and moving to fine them. It sure would be nice if that dissuaded the companies from trying this in the first place, but I don't hold out that much hope that it will.
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