L.A. City Attorney Rocky Delgadillo Sues Blue Shield to End Rescission Practices

Suit Seeks More Than $1 Billion in Damages
The Los Angeles Times reports that in a lawsuit filed July 16, Los Angeles City Attorney Rocky Delgadillo has accused health insurer Blue Shield of using complex and confusing applications to trick consumers into making allegedly false written statements the insurer can use against them in rescinding coverage. (“Blue Shield Sued for Allegedly Lying About Its Coverage”)

The suit alleges the insurer cancels coverage when insureds are ill and facing substantial healthcare costs. Blue Shield may have to pay more than $1 billion in fines and penalties. A similar recent lawsuit against Athem Blue Shield forced the California Department of Managed Health Care to review more than 2000 rescission cases to determine if the cancellations occurred after the policyholders became ill.

The article quoted Dr. Richard Frankenstein, president of the California Medical Assn. “Having health insurance does not mean you will receive healthcare when you need it,” he said. “Insurance companies promise you the moon and a thousand doctors, but if you really need your medical care you can bet they will be looking for a way to deny treatment or cancel your policy.”

We’ve been saying that all along, and its rewarding to know that the head of California’s medical community agrees with us.

Delgadillo’s attempts to keep health insurance carriers honest are praiseworthy, and we hope it is motivated by more than political aspirations. Ending this harmful rescission practice is a huge undertaking, however, and will require more than participation than just one California city attorney’s office. We urge the legal, medical and regulatory communities to get behind these efforts, and we challenge the state legislature to take note and begin to legislate accordingly.

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