The Los Angeles Times reports that Health Net Inc., one of California’s largest insurers, “avoided paying $35.5 million in medical expenses by rescinding about 1,600 policies between 2000 and 2006.” Its senior analyst in charge of cancellations, Barbara Fowler, made $20,000 in bonuses during that period for meeting cancellation goals. We hope for her family’s health that she uses that extra money to buy insurance from a better company than Health Net.
The article says the practice of canceling policies after expensive medical claims is “industry-wide but long-hidden,” and we’re glad they were able to produce some hard evidence that it does indeed happen.
The documents that showed Health Net’s bonus program were made public during a lawsuit brought about by a woman whose Health Net policy was canceled while she was in the middle of chemotherapy treatments. Health Net sought to keep the documents private, “arguing that they contained proprietary information and could embarrass the company.”
Although “state law forbids insurance companies from tying any compensation for claims reviewers to their claims decisions,” Health Net has argued that Ms. Fowler is an underwriter, and therefore not covered under the law.
“Health insurer tied bonuses to dropping sick policyholders” [Los Angeles Times]