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Blue Cross of California, BC Life, HealthNet, and other large California health care coverage  providers have been accused of improperly dropping (rescinding) thousands of health insurance customers using an illegal practice called “post claims underwriting”.  They do little or no investigation when they issue the policy, but if you run up big bills they scour your medical records to find reasons to rescind your coverage based on alleged “misrepresentations” in a confusing and complicated application.  The charge is that they loan you an umbrella and want it back as soon as it starts raining!

Now California’s Governor has joined proponents of regulatory action and class action lawsuits in condemning this practice.  According to the Sacramento Bee, Schwartznegger said it is “outrageous that innocent patients have to live in fear of losing their health care coverage. I look forward to working with my partners in the Legislature to ensure this egregious practice is stopped.” 

Earlier this week the California Court of Appeals rejected an effort by Blue Cross and BC Life, a Blue Cross subsidiary, to force a class action lawsuit complaining about the rescissions to private arbitration, rather than having the case tried by a jury.  The class action attorney involved in that case, Robert Gianelli of the Los Angeles firm of Gianelli and Morris, maintains that binding arbitration has proven to be an unfavorable forum for to consumers in most cases, and that it is private, expensive, and creates no legal precedent.  In that case, Blue Cross dropped Gianelli’s clients, Raudel and Maria Rodriguez,  after they incurred over $100,000 in medical bills. 

A State investigation found that Blue Cross did little investigation of applicants for coverage but, they had a dedicated and computerized unit of the company devoted to finding reasons to rescind their coverage based on their medical history.

Our firm has brought a similar class action against BC Life, one of the Bue Cross companies, on behalf of a San Luis Obispo woman who was left with medical bills when her health coverage was dropped. 

 Yahoo news has an excellent menu of articles on this controversy.

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