Even if you are rejected by Social Security, you can apply for benefits again and again, which is what both lawsuits claim insurers are taking advantage of to avoid paying benefits. The suits cite the federal False Claims Act and contend "that the insurers were knowingly committing fraud."

The insurers have claimed this is just business as usual and it's their policy to require everyone to apply—a Cigna spokesperson disingenuously says, "Our goal is to ensure that each member receives all of the benefits to which he or she is entitled." But a former Gigna employee who's now a plaintiff in one of the suits says insurers abuse the practice by routing everyone to Social Security even when it's obvious they'll never qualify.

Forcing people who are injured to apply for Social Security before paying their claims appears to bolster insurers' profits in several ways. If claimants refuse to apply, the insurers can simply stop paying their benefits, said Dawn Barrett, an employee of the Cigna Corporation, who grew frustrated sending people to Social Security and who is now a plaintiff in one of the lawsuits. More typically, she said, people apply for Social Security when an insurer tells them to. That allows the insurer to reduce its claim reserves, money that is kept in conservative investments for benefit payments. And in the insurance industry, smaller reserves mean bigger profits.

"Insurers Faulted as Overloading Social Security" [New York Times]

The new proposals call for states to provide affordable coverage to anyone whose medical costs are expected to be at least twice the average. For other higher-risk patients who do not meet those criteria, the insurers would agree to cap the premiums at 150 percent of the market rate.

But the industry is also trying to have a greater say in any state changes that may be enacted. Many insurers chafe, for instance, over what they consider an overly regulated approach in Massachusetts, which has created an agency to oversee the market for individual insurers as part of a new law requiring everyone to buy coverage.

"This is advice to the states on how they can create functioning and viable marketplaces," said George C. Halvorson, the chief executive of Kaiser Permanente, the California insurer, who chairs the trade group.

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]
(Photo: Getty)

Highmark is quite proud of their new invention. They clearly feel that not only is it in good taste, which it isn't, but that there's never been anything else like it on the planet, which there has:

"Ultimately, we think this product may go national," said Kim Bellard, Highmark's vice president of e-marketing and consumer relations. He expects other insurers will be interested in using the "intellectual technology," which Highmark hopes to patent.

"Highmark offers the ultimate get-well card" [Pittsburgh Post-Gazette] (thanks to Uri!)

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