News: 2009 Press Release
For Release: January 6, 2009
Media Calls Only: 916-492-3566
Insurance Commissioner Steve Poizner Announces Settlement with Blue Shield Over Rescission Practices; Every Affected Consumer to Receive Full Reimbursement for Medical Costs
Insurance Commissioner Steve Poizner announced today that the California Department of Insurance (CDI) has reached an agreement with Blue Shield of California Life & Health Insurance Company to offer new health insurance to 678 consumers whose policies were rescinded between January 1, 2004 and May 31, 2008, reimburse them for out-of-pocket medical expenses and implement significant changes in its underwriting and claims practices.
"I had two goals in this settlement - make whole the nearly 700 people who had their health insurance terminated and put an end to the rescission practices that were hurting consumers," said Commissioner Poizner. "People pay their insurance premiums and expect to be taken care of if they have an emergency. Canceling someone's insurance can have devastating medical, emotional, and financial impacts. I will continue to take action against those insurers who do not live up to their agreements."
Under the terms of the settlement covering allegations of unfair claims handling and improper rescission practices, Blue Shield will immediately offer coverage to 678 consumers whose individual, family, or short-term health policies were previously terminated without subjecting them to medical underwriting or exclusions for pre-existing conditions. Any medical expenses that would have been covered under the rescinded policies that are not covered by another source will be reimbursed or paid by Blue Shield. An expedited independent arbitration process has been established to resolve any disputes regarding these expenses.
As part of the settlement, Blue Shield has agreed to make significant changes to its application forms, underwriting process, agent/broker training, notification to consumers and providers of an investigation regarding information in the application and oversight of its claims handling. It has also agreed to establish an independent third party review process for rescissions going forward. Blue Shield is subject to up to a $5 million penalty if corrective actions are not implemented in the prescribed timeline.
For details about eligibility under this settlement, call Blue Shield at 888-575-3439.
Today's announced settlement is the latest action by Commissioner Poizner to end the practice of improper rescissions and stem claims handling violations.
In September 2008, Health Net agreed to restore health coverage for nearly 1,000 consumers whose insurance coverage had been rescinded. That settlement led the way and Health Net was the first to agree to establish an independent third party review process for future rescission decisions.
In January 2008, Commissioner Poizner announced an action against PacifiCare Life and Health Insurance Company, a wholly owned subsidiary of United Health Group, in response to tens of thousands of alleged claims handling violations.
- Blue Shield Stipulation and Waiver can be viewed here.
- Blue Shield Accusation can be viewed here.
Please visit the Department of Insurance Web site at www.insurance.ca.gov. Non media inquiries should be directed to the Consumer Hotline at 800.927.HELP. Callers from out of state, please dial 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.
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