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April 17, 2008

Los Angeles Files Lawsuit Alleging Anthem Blue Cross Illegally Canceled Health Insurance Policies

Los Angeles City Attorney Rocky Delgadillo on Wednesday filed a lawsuit against Anthem Blue Cross alleging the insurer violated more than 25 state and federal laws and "sold people false promises of coverage and concealed a scheme to renege on policies for those diagnosed with serious and often expensive medical conditions," the Los Angeles Times reports. Delgadillo claims the insurer issued false promises of coverage and concealed a plan to rescind the health insurance policies for patients diagnosed with serious and costly medical conditions. The suit seeks restitution for patients left with medical bills and more than $1 billion in penalties.

The lawsuit claims that the company's coverage "is largely illusory." Delgadillo said Anthem "engaged in an egregious scheme not only to delay or deny the payment of thousands of legitimate medical claims but also to jeopardize the health of more than 6,000 customers by retroactively canceling their health insurance when they needed it most." He added, "Countless Californians who believe they have good health insurance actually have policies that aren't worth the paper they're printed on."

The charges cited by the suit include some allegedly illegal activities reported by a Times article highlighting the rescission of policies held by individuals with costly medical conditions. Jerry Flanagan, a patient advocate with Consumer Watchdog, said, "The complaint makes it very clear that a key part of the resolution will be to make sure everyone has coverage."

Cindy Ehnes, director of the state Department of Managed Care, on Thursday is expected to announce that rescinded policies of several individuals would be reinstated by health care plans and to describe a process by which other patients could have rescissions reviewed and reconsidered. State Insurance Commissioner Steve Poizner said he would examine the allegations and decide whether action is needed.

A spokesperson for Anthem's parent company, WellPoint, said the company "strongly disagrees with the allegations" and plans to defend itself. "Anthem has offered on several occasions to meet directly with the city attorney to provide further information on Anthem's rescission procedures," said Shannon Troughton of Wellpoint. "To date, the city attorney rejected each of these offers, and we are disappointed by his actions today because of our attempts to meet with him," she added.

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Posted by healthinsurance at April 17, 2008 11:53 AM