State Regulators Fine Blue Cross for Canceling Policies

March 26, 2007

  • March 26, 2007 at 11:07 am
    Terence says:
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    Having trouble in Nevada with Blue Cross?
    You must put pressure on your Department of Insurance–the government body that enforces the Nevada Insurance Laws. AND collect info on instances of abuses practices and establish a pattern. How many lawsuits have been filed against them in past 48 months? It took over 20 years for California to realize that I was not joking when I first brought their abusive practices to the attention of the California Department of Insurance.

  • March 26, 2007 at 11:15 am
    Terence says:
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    The Department of Managed Health Care(DMHC) has fined Blue Cross $1,000,000.
    Now we await the decision of the Department of Insurance, who has had their investigation going on for eleven months.
    I wonder when they will publish their findings? And I wonder if the findings will be similar to those of the DMHC?
    Call the Insurance Commissioner at 916 492 3500 and ask when the report will be released. Please.

  • March 26, 2007 at 4:47 am
    mv says:
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    Is WELLPOINT, INC and Anthem Blue Cross all under the same parent company??(Wellpoint, Inc.) We\’ve had a terrible experience with Anthem Blue Cross in Nevada. Wondering what the connection was, if any, to this California Investigation. How can we initiate an investigation here in NEVADA. The \”good old boy\” State?

    Thank you.

  • March 29, 2007 at 1:46 am
    ken says:
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    Terence,

    Interesting. The CA Insurance Commission (Garemendi) fought the Blue Cross – Anthem Merger. They were afraid that less competition would foster greed and corruption. They were right, but no fines yet.

    On the other hand the CA DMHC who fined Blue Cross $1M was for the merger. On their website they did \”not hold back\” with their survey (see website) by stating they broke state law in ALL 90 random cases. Maybe they feel guilty?

    Ken

  • March 29, 2007 at 7:56 am
    ken says:
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    Terence,

    The CA Insurance Commission had a similar instance with a smaller company and they got fined $8M. Expect this fine to be above that.

  • March 29, 2007 at 8:19 am
    ken says:
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    The CA Insurance Commission has on their website that $8M fine against UnumProvident over mishandling of disability claims–article dated 3 October 2005, by John Garamendi. Also attached to that is the LA Times article dated 3 October 2005 by Peter Gosselin. It was for a few thousand claims, but the DMHC believes Blue Cross has also done thousands of illegal post claims underwriting—I think that is why they are still investigating after 11 months as Terence pointed out. They believe that Blue Cross did at least 1000 a year for 10 years–minimum—articles call it the \”tip of the iceberg.\” When you see 90 random samples all come back breaking state law, you know almost all the rest will be the same—and that is thousands of illegal policy cancelations–just like Unumprovident.

    Blue Cross\’ conduct was more egregious and they are \”thumbing their nose\” even today and with $3.01B profit last year, and up 156% since 2004 (see CNN money.com or Fortune) they will get hit with a fine above $8M.

    Did you know $3.01B is a profit of $5,500 each minute and if youinclude their stock price going up 15% then it is $10,000 a minute. They can buy a brand new Mustang car every 2 minutes for a whole year—profit. That is 365 days, and 24 hours per day and 7 days a week.

    An $8M fine is 6 hours of lost profit in a year for Blue Cross. That $1M fine by the DMHC was 1.5 hours lost profit.

  • March 29, 2007 at 11:16 am
    terence says:
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    Bean counters had an opinion on the Merger.

    Others had opinions on claims practices.

    Big difference on an opinion on the administration of the HMO contact.

    The hoops to jump through in order to rescind an insurance policy and many and complex. But the insurance industry has many talented investigators who know the rules, know how to investigate, know where to obtain the facts and know how to present their arguements as to why the contract is being rescinded.
    To the detriment of Blue Cross, none of these investigators work in Woodland Hills.

    Using a term like \”broke the law\” is much too general to have any meaning. More specific examples of behavior would get the point across better. I can give you a dozen examples of GOOD & SOLID rescissions with a dozen examples of IMPROPER rescissions. Each case must be studied. Then you can see that the
    applicant made a BOLD FACED LIE
    or an innocent error in completing the questions within the application.
    Those who make the BOLD FACED LIE are easily found out, and they are rescinded.
    Others deserve the help of the State regulators as some of the rescission actions are improper–and explaining why the conduct of Blue Cross is IMPROPER has been a constant battle. I once spent 25 minutes explaining why four rescission cases were improper and should be reinstated. The manager and his two assistants said \”So what?\”

    At long last Blue Cross is being pulled into the 21st century in a very expensive manner. The next fine in April will exceed $2.3 million.

  • March 29, 2007 at 11:40 am
    klapper says:
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    EXAMPLE
    A man tears ligament in knee playing softball in March. He visits ER on Monday and learns that surgery is likely.
    On Wednesday he meets with Blue Cross agent and applies for coverage. He discloses arthritis in wrist from an injury of 4 years ago; he discloses enlarged prostate treated with Flomax; he discloses surgery for removal of wisdom teeth 2 years ago; he discloses two episodes of pneumonia in past 5 years.
    Three weeks later, agent calls to tell him policy has been issued with effective date of May 1. He consults with surgeon May 14, and has surgery May 28.
    Insurance company investigates and learns that the injury happened a week prior to applying for the coverage AND also notes that no mention was made of the ER visit in the days prior to contacting the agent.
    Insurance company rescinds policy–they refund the premium.
    This is a solid rescission.

  • March 29, 2007 at 12:41 pm
    Klapper says:
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    A woman leaves her group insurance and buys individual coverage when she moves to California. Three months later, she
    visits a new OB-GYN as she has just moved to L.A from Des Moines. She is asked to complete health history questionnaire at Dr\’s office prior to seeing physician. She discloses that she has had two children, has had normal pap smears for many years, had bladder surgery two years ago in Iowa, has had a reaction to a chemical at work that caused skin rash that was treated successfully one year ago. She also mentions Dr visit for chest pain 2 years ago.
    This new Dr examines her, and his findings include a suspicious pap smear .
    Further expensive tests are ordered,and hysterectomy is contemplated. As an inpatient, another physician collects data on her health history, and the resulting data is much more detailed. She spends 30 minutes describing her health history to the in-take physician, while it took her 4 minutes to jot down the high points on her first visit to the new OB-GYN.

    When the company investigates, they discover on the hospital record that she had been treated by a dermatologist for a skin condition . Also, bladder infections have been treated in past and she had chiropractic treatment six years ago for a back strain. Also, an evaluation by cardiologist .
    At this point the Blue Cross examiner concludes:
    1)She failed to disclose the chiropractic treatment
    2)She failed to disclosed bladder infections
    3)She failed to mention the dermatologist
    4)She failed to mention the cardiologist

    Blue Cross rescinds the coverage. They avoid paying for the very expensive testing for investigating of abnormal pap, and avoid the hysterectomy charges that will be filed.

    This is an improper rescission.

    1) Chiro tx a long time ago is of no consequence per their underwriting regulations
    2) Bladder infections are associated with bladder surgery–this condition was indeed disclosed .
    3) skin rash was disclosed. The fact that she did not spell out DERMATOLOGIST is not evidence of misrepresentation.
    4)chest pain ER visit was disclosed–follow-up visit to cardiologist is implied.

    This case did not go to trial. It was settled for $700,000, and she was able to have her coverage reinstated.

    This example of sloppy and incomplete analysis on the part of Blue Cross demonstrates why they are in trouble in 2007. They just do not get it…

  • March 30, 2007 at 7:06 am
    ken says:
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    Terence,

    Read:

    Blue Cross, Blue Shield, Blue Crominal

    by Robert Weissman on 25 July 1998.

    Fines of $144M and more by illinois.

    They estimated $100 billion these insurance companies make each year on fraud–that was 1998.

    Blue Cross is #2 and Health Net #1. In CA Blue Cross has 4,450,469 enrolees. What is $17M fine to them. Nothing. It is one day of lost profit. That is less than 1%—or 1/3 of 1% loss if they get a $17M fine.

    Blue Cross just settled a class action suit by 900,000 doctors nationwide for $200M.

    These fines are a joke. They do it so they do not have to fight Blue Cross and it is quick income in the bank–but does not solve the problem.

    To get the attention of Blue Cross the fines would need to be $500M or more. Clearly they should be as their activities are criminal. That article points out how criminal they are and how our politicians and agencies are afraid of them.

    That was back in 1998. Blue Cross is a lot worse now and a lot more powerful with the Anthem Merger.

    The only thing that can stop them is for people to cancel their insurance.



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