Blue Cross of California has been fined $1 million by the California Department of Managed Health Care for routinely rescinding health insurance policies, including those of pregnant women and the chronically ill, in violation of California law. The investigation of Blue Cross was unprecedented, and the DMHC said it will conduct similar investigations of other health plans beginning next month, reports the Los Angeles Times. “We are now trying to clean up an industry practice,” Cindy Ehnes, director of the DMHC, told the Times. The investigation of 90 policies cancelled by Blue Cross found that in all cases, Blue Cross did not prove that an applicant willfully misrepresented his or her medical history before coverage was rescinded. And in 39 of 90 cases, there was no evidence that Blue Cross conducted a complete pre-enrollment investigation of the applicant’s medical history or conformed to its own underwriting policies before issuing health coverage. Blue Cross’ parent company WellPoint Inc disagreed with the findings, telling the Times, “The vast majority of Blue Cross’ rescissions are unquestionably proper under any criteria.” Read the investigation report.
