California Seeks To Fine Blue Shield $12.6 Million For Illegal Cancellations

The LA Times says that the State of California is seeking a $12.6 million dollar fine against Blue Shield for 1,262 violations of claims-handling laws that resulted in 200 people losing their insurance. Blue Cross and Blue Shield have already been fined $1 million for improperly terminating the policies of the sick and pregnant.

The department’s action against Blue Shield is the latest example of regulators closing ranks on the cancellation issue. Both agencies are seeking regulations aimed at curtailing cancellations, also known as rescissions. And both are investigating the way these are handled at the state’s biggest health plans.

In March, the first of those investigations came to fruition when the Department of Managed Health Care hit Blue Cross, the state’s largest for-profit insurer and a Blue Shield competitor, with a $1-million fine after reviewing 90 cancellations and finding alleged law violations in every instance.

The move against Blue Shield marks the first time the Department of Insurance has taken legal action against an insurer over its cancellation practices. But it may not be the last.

Poizner said Wednesday that he had directed his agency “to target this type of forbidden behavior on an industrywide basis and we will continue to take appropriate action as needed.”

State accuses Blue Shield of illegal cancellations [LA Times via WSJ Health Blog]