Blue Shield Latest Insurer to Settle Rescission Lawsuit

Lisa Girion of the Los Angeles Times reported this week that Blue Shield has become the latest California health insurer to reinstate policyholders whose insurance was rescinded when they applied for medical benefits. Nearly 700 people not only regained their coverage, but also were reimbursed for their medical bills. http://www.latimes.com/business/la-fi-insure7-2009jan07,0,2471877.story

The state Department of Managed Health Care had sued Blue Shield, along with most of the state’s other health insurers, for using innocent mistakes on policy applications as excuses to cancel policies after the insured became ill. Thousands of California policies have been illegally rescinded, the lawsuits allege.

While insurers continue to settle the suits and reinstate and reimburse their policyholders, we agree with consumer advocates who believe the Department of Managed Health Care should do more to regulate the practice of rescission in the future. Some have even suggested that Commissioner Poizner left Blue Shield off easy by this settlement, and that such a settlement will NOT discourage this practice by insurers in the future. We urge the department and state Insurance Commissioner Steve Poizner to complete the regulations he promised that would penalize insurers for their rescission practices, and deter such future conduct.

We also wish to applaud Ms. Girion and the Los Angeles Times for continuing to report about this important consumer-protection issue and keeping government officials accountable to the public. 1/8/09 AK

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