Health Industry Practice of Canceling Coverage After Issuing a Policy

 

Los Angeles City Attorney Rocky Delgadillo, the city’s chief prosecutor, announced his office has filed a civil law enforcement action on behalf of the People of the State of California against WellPoint, Inc., and two of its subsidiaries for engaging in unlawful and deceptive business practices that lead to the denying or delaying of authorization of thousands of health insurance claims or the  canceling of coverage after initially issuing a policy.

“The health insurance industry is not focused on truly improving our care, lowering our costs, or rooting out fraud,” said City Attorney Delgadillo, who several weeks ago filed a similar law enforcement action against Health Net. “The industry’s singular focus is on maximizing profits - at the expense of patients and their doctors.”

This complaint, filed in Los Angeles Superior Court, alleges that WellPoint, Inc., Anthem Blue Cross of California and Anthem Blue Cross Life engaged in unlawful, unfair and fraudulent business practices and unfair, deceptive, untrue and misleading advertising in violation of California’s Unfair Competition (Business and Professional Code 17200) and False Advertising (Business and Professions Code 17500) laws.

In the complaint, the City Attorney alleges that Blue Cross used false and misleading advertising to attract more than 500,000 customers. Blue Cross collected applications from customers using intentionally misleading forms with little or no meaningful review of the accuracy of responses or informed investigation into the medical history of applicants. In addition, applicants were often assisted by untrained and unsupervised agents in completing the application, further complicating the process.

Only after policyholders submitted claims for medical services would Blue Cross retro-actively conduct investigations into their medical history in order to find discrepancies in the application. As a result, the City Attorney’s Office believes that since 2002, Blue Cross has denied benefits to more than 6,000 individuals, and thousands more have had their benefits delayed because of these practices.

The civil suit seeks to enjoin Blue Cross from engaging in the illegal activities outlined in the complaint and order Blue Cross to comply fully with the law. In addition, the suit seeks civil penalties of $2,500 for each violation of the Unfair Competition Law and False Advertising Law, and an additional $2,500 penalty for each Unfair Competition violation that victimized any senior citizen or disabled person.

City Attorney Delgadillo also seeks to have wrongfully canceled policies reinstated and full restitution paid to all victims of Blue Cross’ unlawful practices.

In February, City Attorney Delgadillo launched a first-of-its-kind Website - www.ProtectingTheInsured.org in order to collect information from consumers, doctors, and hospitals as part of the ongoing investigation into the potentially unlawful, fraudulent, and unfair activities of health insurance companies.

 

For more information, consumers are asked to visit www.ProtectingTheInsured.org or City Attorney Rocky Delgadillo’s Website at www.lacity.org/atty.

 

Editor’s Note:  There are over 461,000 insured Blue Cross members in the Inland Empire.