Blue Cross Illegally Canceling Policies

What another shocking report on dubious Blue Cross business practices. LAT:

BC Life & Health revoked 1,880 individual health insurance policies in California in 2004 and 2005, and a state agency that examined a sampling says it found that more than half the cases it reviewed were improperly handled.

The Department of Insurance said it studied 83 sample cases and issued citations in 49 of them, alleging 67 violations of fair-claims handling laws.

In one case, the department contended that BC Life, a Blue Cross company, told a policyholder in a letter that it rescinded coverage because of an undisclosed medical condition, even though the condition was clearly stated on the individual's application.

In another case, the department alleged that BC Life improperly rescinded a policy after miscalculating the period of time between treatment and the effective date of coverage. BC Life declined to reinstate coverage even after the department brought the error to its attention, according to a report issued by the agency.

When coverage is rescinded, it is as if the policy never existed, leaving the policyholder and healthcare providers to settle outstanding charges.

Blue Cross could be facing up to $670,000 in fines for these violations. It is high time the legislature help them clean up their act. Current regulations have not done enough to deter them from these abhorrent practices.