"Health & Medical News"

Health plans are facing even more legal, regulatory and legislative challenges to their practice of canceling enrollees’ coverage after approving treatment. In reaction to the mounting pressure, some insurers are changing their rescission policies.

Last month, Health Net became the latest target in California. A state arbitrator on Feb. 21 levied a $9 million award, largely in punitive damages, against the insurer for canceling a breast cancer patient’s policy after authorizing $129,000 in medical care. The plan dropped the woman for supposedly misrepresenting her weight and a heart condition on a pre-enrollment form.

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A California appeals court ruling may bode well for physicians and patients in their fight against alleged illegal policy cancellations by health insurance companies.

A three-judge panel of the 2nd District Court of Appeal unanimously ruled that the practice of reviewing individuals’ applications after they have submitted claims and then pulling the coverage based on alleged errors “is flatly prohibited” under state insurance laws. The Dec. 4, 2007, decision gave the green light to a patient’s class-action lawsuit alleging that Blue Shield of California tried to dodge claims by looking for supposed misstatements or omissions on patients’ policy forms after approving treatment.

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