Blue Cross and Canceled Calif. Policyholders Agree to Settlement

A class action settlement has been reached with Blue Cross of California, a Wellpoint subsidiary, concerning the cancellation of health insurance policies that occur after a claim for pre-authorized medical treatment. From now on, Blue Cross has agreed that it will not retroactively cancel insureds’ health insurance policies unless the insured “intentionally misrepresented” information on the insurance application.

“This will stop the practice of canceling health insurance policies for honest mistakes, inadvertent errors, or other inconsistencies that often appear on health insurance applications,” said William Shernoff of the Claremont law firm of Shernoff, Bidart & Darras, who represented the class of approximately 6,000 Blue Cross policyholders.

The settlement also includes a new individual health insurance application to help minimize mistakes and implement new procedures at Blue Cross.

Both the Department of Managed Health Care and the Department of Insurance had representatives involved in the mediation process, presided over by former California Supreme Court Justice Edward Panelli.

Approximately 6,000 Blue Cross insureds had their coverage cancelled under such circumstances, Shernoff said.

Source: Shernoff, Bidart & Darras