Post-Claim Underwriting – Ticconi v. Blue Shield may shift odds in policyholders’ favor

A court ruling that actually favors the insured and hurts insurance companies?!? As far-fetched as that sounds, particularly in California, that’s exactly what happened recently when a state appellate court questioned California health insurers’ practice of waiting until policyholders incurred medical expenses before scrutinizing individual policies for misstatements, and then canceling coverage for omissions and errors.
This long-standing practice called “post-claim underwriting” occurs when the insurer examines representations made on the policy application only AFTER medical claims have been submitted. If ANY inaccuracies are uncovered, the company CANCELS THE COVERAGE ALTOGETHER. The insured is left with the medical bills and no insurance at a time he or she needs it more than ever.
Post-claim underwriting has been illegal in California since 1993. But that hasn’t stopped insurers from attempting to circumvent the law by using the practice against unsuspecting policyholders such as Augusto Ticconi, who sued Blue Shield for denying coverage after he incurred more than $100,000 in medical expenses. Post-claim underwriting cases don’t usually make it to trial, because insurance companies quietly settle before courts have a chance to rule against them.
Ticconi didn’t go away. He asked the trial court to certify a class action, which would allow other policyholders denied coverage to benefit from a ruling against Blue Shield. The trial court denied class certification. The 2nd District California Court of Appeals overruled the trial court and ordered it to reconsider class certification.
This paves the way for a class-action lawsuit against Blue Shield and other major health insurers. The thousands of individuals taken advantage of by their insurance providers over the years may finally get a chance to win restitution for the loss of their health coverage at the worst time possible.
In Ticconi v. Blue Shield, the California Court of Appeal sent two clear messages. To insurers, the court said post-claim underwriting won’t be tolerated. And the court assured consumers they can fight insurers and win.
This is a message of hope to policyholders of life, health, disability, long-term care and every other type of insurance who have been treated unfairly by an insurance company.

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