Blue Cross of California Fined

Posted by Kathy Quan Mar 23, 2007

The California Department of Managed Health Care reported that it has fined Blue Cross of California $1 million for these violations. Blue Cross continues to contend that it did nothing wrong. California state law allows insurance companies to deny coverage to individuals with preexisting health conditions.

Coverage cannot be denied to members of group health insurance policies. Individual policies are for consumers who cannot get group coverage.

State investigators found that Blue Cross was using computer programs as well as a dedicated department to investigate claims for chronic illnesses and pregnancy made by individual policy holders. Regardless of whether they could prove that the policy holders lied about these conditions on their applications, Blue Cross began cancelling coverage.

The investigation was prompted by stories in the Los Angeles Times newspaper about individuals suffering hardships and even the loss of their homes due to the fact that they got sick and Blue Cross cancelled their health insurance policies.

California state regulators plan to investigate other health plans for similar accusations of canceling health insurance policies. They will review Blue Cross in 18 months to ensure they have cleaned up their act.