Another Health Insurance Company in California has settled "Post-Claims Underwriting Rescission" allegations with a regulatory agency. Health Net Inc. reportedly agreed with the California Department of Insurance to these provisions addressing such allegations in connection with Health Insurance Policies issued to individual persons:
1. Pay $3,600,000.00 in Penalties;
2. Pay up to $14,000,000.00 on Medical Claims it had previously denied; and
3. Offer to reinstate 926 individual Policyholders whose individual Health Insurance Policies were "rescinded" after they made Claims.
The settlement agreeement is said to be the first of its kind with the California Department of Insurance. As reported in the linked article, Federal Law prohibits cancellation of Group Health Insurance Policies issued to Employers. Lisa Girion and Marc Lifsher, "Health Net to Reinstate 926 Dropped Policyholders in California" (Los Angeles Times Online, Friday, September 12, 2008).
The newest settlement comes shortly after many related developments on cancellation and rescission and alleged "Post-Claims Underwriting," all of them posted here previously. As summarized in the linked newspaper article, past developments on these issues include:
Health Insurance Companies agreeing to pay fines to the California Department of Managed Health Care;
A lawsuit by the Los Angeles City Attorney asserting fraudulent practices;
And an Arbitration Hearing in which Punitive Damges were assessed because the evidence showed that in part Employee Bonuses were awarded based on the number of "Rescinded" Policies after Claims were made. See id.
It remains to be seen whether future allegations of these practices in California will resume against individuals who hold Health Insurance Policies, get sick, and make a claim.
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