Blue Cross impervious to state fines for wrongful policy rescissions
An article by the San Jose Mercury News noted that in early 2007 the State of California had fined Anthem Blue Cross one million dollars for wrongfully rescinding some 1700 health insurance policies. By mid-year, 2008, the State had not attempted to enforce the fines, because ABC would fight the fine vociferously, and the State of California feared it could not afford to litigate the claims.
We include this matter in our blog just in case anyone wondered about the impact of "starving the governmental beast", and frankly, just in case there was a serious question about whether the government or large corporations have a greater impact on our lives and public policy.
ADDENDUM: The following day, the Houston Chronicle reported that Wellpoint subsidiaries Blue Cross of California (now known as Anthem Blue Cross) and Blue Cross Life and Health had settled a lawsuit brought against them by California hospitals for wrongful rescission of patients' policies. The hospitals had argued that Blue Cross fly-specked medical histories and applications after medical claims were filed, in an effort to identify alleged inconsistencies that would rationalize the companies' decision to rescind the policies. In April, Blue Cross had adamantly denied the hospitals' claims and vowed to defend the lawsuit brought by the Los Angeles City Attorney.
The hospitals will be re-paid, and insureds who paid out-of-pocket will be reimbursed. Apparently nothing will be done for people who delayed care or who received services from a third-party provider. So the Blues managed to delay 11 million dollars of claims for two years and still avoid paying their full obligation, without any penalty.